Phillips 66 CEO Mark Lashier said 90-100M barrels of crude are stuck in the Strait of Hormuz, with storage tanks full. The disruption will keep refining margins volatile, even as the company cuts costs.
Roughly 90 million to 100 million barrels of crude oil remain stranded in the Strait of Hormuz region, with onshore storage tanks already at capacity. Phillips 66 CEO Mark Lashier said the logjam will keep refining and petrochemical companies under pressure for an extended period.
"We believe that most of the tanks on shore are full before crude can appreciably ramp up," Lashier said in a late June interview. "You have to get some room in those tanks to place that crude, and so it's going to be a long, drawn-out process."
Lashier also said the company has reduced its refining costs by about $1 per barrel and aims to bring that figure down to $5.50. Operations in California remain more expensive, with costs around $15 per barrel. He added that Phillips 66 has improved its refinery utilization and the yield of higher-value products. "We actually have improved our yield of high-value products for our refineries, and we've enhanced our utilization, running our refineries at higher rates as we've lowered the cost," he said.
Wells Fargo analyst Sam Margolin maintained a Buy rating on the stock with a $201 price target, implying roughly 20% upside from current levels. The rating reflects confidence that the company's cost-cutting and yield improvements will cushion the impact of the supply disruption.
PSX carries an Alpha Score of 65 out of 100 (Moderate) from AlphaScala's proprietary model. The score balances the cheap valuation against the operational risk tied to the Strait of Hormuz uncertainty.
The Strait of Hormuz carries roughly one-fifth of the world's oil supply. The bottleneck has pushed crude oil prices higher and forced refiners to scramble for alternative barrels at often higher prices. For Phillips 66, the California cost disadvantage remains a structural drag even as the company improves its national average.
Margolin's $201 target suggests the market has already priced in some of the disruption risk. Lashier's comments make clear that the timeline for recovery is uncertain. The company's ability to keep costs down and run its refineries at higher rates will be the key variable in the months ahead.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.