US refineries running near top capacity for months risk breakdowns. A major unit failure could push gasoline above $4 a gallon, analysts warn.
US refineries are running near maximum capacity to plug global fuel gaps after the Iran war and Russian disruptions stripped supply from the market. Equipment failures could worsen the crisis, operators and analysts said.
Valero Energy Corp. and Marathon Petroleum Corp., the two largest independent refiners, have posted record margins. Gulf Coast utilisation has held above 95% for two straight months, industry data shows – the longest stretch since at least 2018.
Refinery operators warn that sustained maximum output raises the odds of unplanned outages. A single catalytic cracker failure at a large plant could remove 300,000 barrels a day of gasoline supply. “We’re walking a tightrope,” a Gulf Coast refinery manager said. “Any major breakdown would be felt immediately at the pump.”
The risk is highest at older facilities, particularly those built before 2000. About 40% of US refining capacity falls into that vintage, according to the Energy Information Administration. Those units have operated at elevated rates since the Russia-Ukraine conflict began in 2022.
A string of minor outages has already trimmed supply. In March, a fire shut a crude unit at Exxon Mobil Corp.’s Baton Rouge refinery for three days. Last month, a compressor failure idled a fluid catalytic cracker at Phillips 66’s Wood River plant for a week. Both incidents were resolved quickly. Operators say the cumulative strain is building.
The next test comes with the summer driving season starting late May, when gasoline demand peaks. If a major unit trips during that window, the resulting supply squeeze would push retail prices above $4 a gallon for the first time since 2022, analysts at energy consultancy Turner, Mason & Co. said.
Global fuel markets are already tight. The Iran war has removed about 1.5 million barrels a day of crude and products from the market. Russian refinery outages have cut another 500,000 barrels a day. US refiners are the only source of spare capacity in the OECD. Their ability to fill the gap depends on keeping existing equipment running.
For a deeper look at oil market dynamics, see the crude oil profile.
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