Phillips 66 has disclosed approximately $900m in pre-tax mark-to-market losses for the first quarter of 2026 (Q1 2026), a direct consequence of the oil price surge that followed the closure of the Strait of Hormuz.
The US refiner attributed the impact to its net short position in crude oil, refined petroleum products, natural gas liquids and renewables feedstocks-related derivative contracts. These positions were held as economic hedges to manage price risk for certain physical positions.
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Energy prices climbed steeply after the US-Israeli conflict with Iran began in late February.
Iran’s effective closure of the Strait of Hormuz, a chokepoint for roughly a fifth of global oil and gas supplies, disrupted energy markets and sent crude prices climbing.
Brent futures recorded a 64% monthly increase in March, according to LSEG data, while US benchmark West Texas Intermediate gained approximately 52%, a monthly rise not seen since May 2020, reported Reuters.
Phillips 66’s refining segment is expected to absorb between $350m and $450m of the mark-to-market losses. The marketing and specialties segment faces an estimated $300m–400m impact, while the renewable fuels segment could see losses ranging from $100m to $200m.
The company’s net short position in crude and products-related derivative contracts stood at approximately 50 million barrels (mbbl) as of last month.
Preliminary pre-tax income estimates for Q1 2026 show the midstream segment generating $550m–600m and the chemicals segment contributing $80m–130m.
Refining is projected to post a loss of $200m–400m, while marketing and specialties could record a loss of $20m–170m.
The renewable fuels segment is forecast to post an estimated loss of $50m–150m, and the corporate and other divisions a loss of $450m–470m.
Beyond mark-to-market impacts, the refining segment recorded unfavourable effects of nearly $300m pre-tax from the standard two-week lag in Gulf Coast clean products pricing.
The midstream segment was affected by producer downtime linked to Winter Storm Fern and accelerated depreciation at a Permian Basin gas plant.
The chemicals segment’s global olefins and polyolefins utilisation was also affected by reduced operations at CPChem’s Middle East joint ventures.
The marketing and specialties segment’s margins were additionally affected by rising spot prices during the quarter. Phillips 66 also revised its Q1 2026 guidance, lowering global olefins and polyolefins utilisation to low-90% from the prior mid-90% estimate.
The rise in commodity prices during the quarter resulted in a net cash outflow of approximately $3bn on derivative positions.
As of 31 March 2026, the company reported approximately $6bn in liquidity, comprising $5bn in cash and cash equivalents and $1bn in total committed capacity under credit facilities.
Full first-quarter earnings are due to be reported later in this month.
In February 2026, Phillips 66 reported net income of $2.9bn, or $7.17 per share, for Q4 2025, compared to $8m, or $0.01 per share, in the corresponding quarter of the previous year.
