Galp reports record refining margin as Middle East cuts fuel supply

what happened

Portugal’s Galp Energia said its refining margin more than tripled year on year in the third quarter to a record $33.8 per barrel, compared with $9.5 a year earlier. Newsmetry API reported that the measure also doubled from $16.8 in the previous three months. Galp attributed the increase to the Middle East conflict, which tightened refined-product supplies and pushed prices sharply higher.

Galp operates Portugal’s only oil refinery, at Sines, with capacity of 226,000 barrels per day. The facility supplies between 85% and 90% of the country’s fuel demand. Benchmark Brent prices surged after the US and Israel attacked Iran in late February, while Tehran effectively closed the Strait of Hormuz. Disruptions to diesel, gasoline and other refined-product supplies lifted their prices above crude, supporting refining margins worldwide.

However, record tanker freight rates in recent weeks could put pressure on margins, as attacks around the Strait of Hormuz raised shipping costs across global energy routes. Galp’s oil and gas production from its prolific offshore fields in Brazil, which provide most of its crude, increased 14% year on year to 131,000 barrels of oil equivalent per day. Average Brent prices rose from $69.1 to $97.0 per barrel. Galp is scheduled to release its third-quarter results on October 26 before trading begins on Euronext Lisbon.

why it matters

The update highlights how supply disruptions can sharply widen refinery margins, while higher tanker costs may reduce some of that benefit for energy companies in subsequent periods.

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