Phillips 66 beats quarterly estimates as Iran war boosts US refining margins

By Pooja Menon

Aug 5 (Reuters) - Phillips ‌66 reported a ​nearly ​fourfold jump in second-quarter profit on Wednesday, crushing Wall Street estimates, as the Middle East conflict squeezed global fuel supplies and ‌sent U.S. refining margins soaring.

U.S. refiners have been among the biggest ⁠beneficiaries of the Iran war, as international buyers have scrambled to secure alternative fuel supplies ‌amid concerns over disruptions to ‌Middle Eastern exports.

The surge in overseas demand has helped push U.S. fuel exports to record highs, particularly for diesel and other refined products.

Phillips' refining ​segment reported an unprecedented jump in adjusted earnings to $3.09 billion from $392 million a year earlier.

Its realized margin in the second quarter more than ⁠doubled to $24.08 per barrel from a year earlier.

The company's net income came in at $3.85 billion, up from $877 ​million a year ago and marking its strongest quarterly profit since 2022, when Russia's invasion of Ukraine disrupted global supply ​chains and boosted refinery earnings.

Rivals HF Sinclair, ‌Valero Energy and Marathon Petroleum also reported their highest quarterly net income since 2022.

Phillips 66 said its net debt fell ⁠nearly 25% to $16.5 billion sequentially.

Raymond James analysts said the "glide path" to achieving the below-$17 billion debt target by the end of 2026 is clearly visible, putting the ⁠company on track to reach the goal a year ahead of schedule.

Quarterly adjusted earnings at ​Phillips 66's renewable fuel segment rose to $544 million, compared with a loss of $133 million a year earlier.

U.S. refiners are beginning to see stronger returns from renewable fuels after years ‌of margin pressure, helped by a recent increase in biofuel blending mandates and a rise in diesel prices linked ‌to the Middle East conflict.

Houston, Texas-based Phillips 66 reported an adjusted profit of $9.41 ⁠per share for the three ‌months ended June 30, compared ​with analysts' average estimate of $7.44 per share, according to data compiled by LSEG.

(Reporting by Pooja Menon in Bengaluru; Editing by ‌Shinjini Ganguli)

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