Key facts
- Phillips 66 CEO Mark Lashier warned of increased earnings volatility in refining and petrochemicals due to Strait of Hormuz disruptions.
- Lashier stated that significant crude volumes remain trapped in the strait, impacting supply flow.
- He noted that onshore storage tanks are full, prolonging the process of clearing trapped crude.
- Phillips 66 has improved its refining efficiency and reduced costs, running refineries at higher rates.
- The company leveraged Jones Act waivers to transport refined products and crude along U.S. coasts.
- Lashier suggested that temporary market supports like SPR releases are diminishing, indicating a structural shift in crude pricing.
Phillips 66 CEO Mark Lashier indicated that disruptions in the Strait of Hormuz will lead to sustained volatility in the company's refining and petrochemical earnings. Speaking at the Reuters Global Energy Forum and a JPMorgan conference, Lashier explained that while immediate supply concerns have eased, a significant volume of crude remains trapped in the strait, and the process of clearing it will be prolonged due to full onshore storage tanks.
Lashier noted that Phillips 66 has implemented cost-saving measures in its refining operations, reducing costs by approximately $1 per barrel and targeting a further reduction to $5.50 per barrel. The company has also enhanced its refinery utilization rates and improved the yield of high-value products. He highlighted that the company's investments in integration have proven beneficial, enabling it to capitalize on market opportunities, such as moving refined products to California and delivering North American crude to its East Coast refineries.
He added that the market's efficient response to the Hormuz disruption helped prevent crude prices from exceeding $200 a barrel. However, Lashier cautioned that some market supports, like releases from the U.S. Strategic Petroleum Reserve and low inventories at Cushing, Oklahoma, are temporary. He anticipates a structural shift in the crude oil price floor as these temporary measures fade.