Analysis-US refiners unlikely to spend big to process more domestic oil

Arathy Somasekhar

Wed, Apr 9, 2025, 9:28 AM 5 min read

By Arathy Somasekhar

U.S. refiners are not readying to marque big-ticket investments to process much home crude and little lipid from apical suppliers Canada and Mexico, manufacture sources and analysts said, an obstacle to President Trump's program to boost lipid output.

Trump's pledge to unleash U.S. vigor accumulation and little prices for consumers has focused connected expanding home lipid drilling. At the aforesaid time, his tariff threats person chopped imports of crude from Canada and Mexico, which relationship for astir a 4th of the lipid U.S. refiners process, adjacent though successful the extremity helium decided to exempt vigor imports.

Uncertainty implicit aboriginal commercialized argumentation whitethorn marque processing much home crude much charismatic to U.S. refiners, but the power is not simple.

The U.S. produces chiefly airy shale crude, which ideally requires a antithetic configuration astatine refineries than denser, heavier Canadian and Mexican crude. More than 70% of U.S. processing capableness is configured to tally heavier grades, and changing the setup tin beryllium a lengthy, costly process.

Reuters spoke to 10 manufacture sources, including refinery staff, executives and analysts, for this story, and each but 1 agreed that refineries were improbable to marque these ample investments.

The 1 refinery source, who declined to beryllium named, said that each companies would research the enactment of boosting incremental airy crude processing capacity, adding that it would besides instrumentality a mates of years and outgo hundreds of millions.

"Nobody is making these concern decisions based connected precise short-term marketplace fluctuations," Barbara Harrison, Chevron's vice president of crude proviso and trading, told Reuters. She added that the sixth-largest U.S. refiner by capableness was presently satisfied with its refinery processing capacity.

"These investments bash not hap overnight, the operation doesn't happen, the permitting doesn't hap overnight. So you truly request to marque definite your concern is aligned with semipermanent marketplace fundamentals," she said.

Slowing gasoline request owed to the maturation successful electrical vehicles, combined with accrued contention from refineries successful different countries, is already starring immoderate U.S. refiners to unopen down, alternatively than put successful reconfiguration.

Independent refiner Phillips 66 successful January forecast 2025 gasoline request to emergence 0.8% globally, and 0.2% successful the U.S. The No. 4 U.S. refiner plans to cease operations astatine its 139,000 barrel-per-day (bpd) Los Angeles-area works aboriginal successful 2025.

LyondellBasell Industries started to permanently shutter its 263,776 bpd Houston lipid refinery earlier this year.