Tightening supply sends fuel margins soaring and oleochemical buyers scrambling

July 2025 has been a turbulent month for the global refining sector. A mix of scheduled maintenance and unexpected shutdowns has taken a heavy toll on crude oil processing capacity around the world, straining supply chains just as peak summer demand kicks in. According to the U.S. Energy Information Administration (EIA), average refinery utilization in the U.S. dipped below 94% during the week ending July 11 — a signal of just how tight things have become.

 

 

These outages are already pushing up gasoline and diesel margins, especially on the U.S. West Coast and across Asia. But the ripple effects go far beyond the pump: industries dependent on refinery by-products — like propylene and naphtha — are also feeling the pinch, with downstream oleochemical markets bracing for higher costs and tighter supplies.

Fires, Floods, and Maintenance Hit Key Refineries Across Regions

In the U.S., a string of incidents has amplified concerns. Chevron reported zinc contamination during the start-up of an offshore well, disrupting Mars-grade crude supplies and prompting a rare 1-million-barrel release from the Strategic Petroleum Reserve to support Exxon Mobil’s Baton Rouge refinery. Around the same time, a lightning strike caused a fire at Citgo’s massive refinery in Lake Charles, Louisiana. Though the fire was quickly controlled, follow-up inspections led to temporary run cuts.

On the East Coast, storm-driven flooding and power failures partially shut down Phillips 66’s Bayway refinery in New Jersey, intensifying local gasoline demand. Meanwhile, in California — where outages had already hit Chevron, PBF Energy, and Valero Energy earlier in the summer — May fuel imports surged to a four-year high, underscoring the state’s vulnerability ahead of hurricane season.

Stratas Advisors estimates that unplanned U.S. refinery outages averaged 470,000 barrels per day (b/d) in the first half of 2025 — a 15% jump from last year. With forecasters predicting an active hurricane season, supply concerns are mounting.

In Asia, planned maintenance is causing additional strain. Major operations began in early July at Bharat Petroleum’s 120,000 b/d Mumbai facility, along with units in Thailand and South Korea. BPCL also announced a shutdown at its 156,000 b/d Bina refinery starting August 11. Anticipating disruption, India ramped up exports in advance.

These scheduled outages have already reduced Asia's light and middle distillate exports by 11.6% in the first four months of 2025, per Reuters. With maintenance schedules extending into late August, regional product availability remains constrained.

In Europe, refiners face different challenges. Aging infrastructure and high operating costs are forcing facilities to scale back. Shell’s 404,000 b/d Pernis refinery in the Netherlands, for instance, has been under maintenance since March, affecting feedstocks critical to specialty chemicals and marine fuels.

What It Means for Oleochemical Markets and Buyers

The consequences are now showing up in data. EIA’s mid-July report noted that U.S. refinery inputs had dropped to 16.8 million b/d, with utilization falling to 93.9%. This tightening is supporting higher prices across the board — and the effects could linger.

For buyers of fatty alcohols, stearic acids, and refined glycerine, the message is clear: plan ahead. Analysts are advising downstream players to secure third-quarter volumes early, diversify their suppliers, and stay vigilant to any further disruptions, whether from ongoing maintenance or severe weather.

With global refining under pressure and no quick fixes in sight, the weeks ahead could prove especially challenging for markets that rely on steady refinery output to keep running.