Oil majors resist pressure to invest in new refineries, fuel prices keep rising

Oil companies are earning unusually high profits as war-related disruptions squeeze supplies of petrol, diesel and jet fuel. ExxonMobil, Chevron, BP, Shell and TotalEnergies reported more than $50bn in combined third-quarter net income, with refining divisions operating near full capacity. Roughly a tenth of global refining capacity has gone offline this year amid the Iran war and Ukrainian strikes on Russian facilities, while export restrictions by China and Russia have further tightened markets. Despite calls from US, G7 and EU leaders to expand refining for energy security, the majors are directing much of their windfall to shareholders and debt repayment. Shell increased its share buyback, Exxon announced a future buyback programme, and BP is prioritising debt reduction.

Companies are making limited upgrades to existing plants, but largely reject major new construction, which takes years and risks becoming uneconomic if fuel demand declines or today’s high margins fade. Exxon will proceed with an expansion in Texas but not raise its planned refining investment; BP says it will not add capacity, and Phillips 66 is concentrating spending elsewhere. Valero is an exception, buying an idle Houston refinery and planning to restart part of its capacity by 2027. Investment is instead shifting toward Asia and other regions: China and the Middle East have added substantial capacity since 2019 while Europe and North America have contracted. Analysts expect tight diesel markets and high refining margins to persist, with one forecasting Brent at $120 a barrel early next year; further conflict could damage energy infrastructure and push fuel prices higher still.