Shares of U.S. refiners fell to two-year lows on Friday in the wake of U.S. President Trump’s announcement of new tariffs, as fears of slower oil and fuel demand and weakening refining margins rattled investors.
Top refiners Marathon Petroleum, Valero Energy and Phillips 66 have shed more than $20 billion in market capitalization since Trump announced sweeping new tariffs on Wednesday afternoon, based on LSEG data.
“We consider the adoption of the ‘reconciliatory tariffs’ will result in weaker global GDP growth and so lower oil demand growth, oil prices and weaker refining margins, as exemplified by the futures markets over recent days,” Alan Gelder, vice president of refining, chemicals and oil markets at Wood Mackenzie.
Crude oil futures were at their lowest in four years and heading for their biggest weekly losses in percentage terms in more than two years amid fears of escalating trade war as China ramped up tariffs on U.S. goods.
Brent futures dived nearly 8% to $64.59 a barrel by 10:39 a.m. ET (14:39 GMT) while U.S. West Texas Intermediate crude futures lost almost 9% to $61.04.
The refining sector is already over-supplied and so its margin recovery is heavily dependent upon the trajectory for demand growth, Gelder said.
Global gasoline demand is expected to peak this year at around 28 million barrels per day amid surging electric vehicle adoption and improving vehicle efficiency, particularly in China, the world’s largest oil importer, according to S&P Global Commodity Insights. Diesel demand is likely already declining after reaching 29 million barrels per day last year.
“We are now expecting much lower demand growth in 2025 and in 2026, so not only do the tariffs stall the recovery in refining margins we previously forecast in 2026, but they also drive refining margins lower, perhaps back to 2021 levels,” Gelder said.
Shares of Marathon Petroleum, which is the top U.S. refiner by volume, were down around 8% at $118.33, the lowest since July 2023, on Friday morning.
Valero Energy, which is the second-largest U.S. refiner by capacity, fell around 9% to $104.32, the lowest since May 2023.
Phillips 66’s shares slid around 9% to $97.49, the lowest since July 2023.
Meanwhile, the energy index sank around 6% on Friday.
The new tariffs are fueling a trade war that will weigh on the global economy and the consumption of refined products including diesel and gasoline, analysts said.
“While crude oil and refined products have been range-bound for most of the year battling the constant tariffs and sanctions hot air, this implementation of sweeping tariffs has forced the market to re-examine demand,” energy analysts at Rabo Bank said in a note.
(Reporting by Nicole Jao in New York; editing by Philippa Fletcher)