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(Bloomberg) -- Profits for Exxon Mobil Corp. and Chevron Corp were slammed by slumping fuel margins as the prospect of US tariffs on two major oil suppliers threatens to make the refining business even worse.
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Exxon posted a 67% plunge in 2024 refining profits on Friday, and Chevron disclosed an even larger decline of 72%. The biggest North American oil companies succumbed to the same forces slashing results for fuel producers around the world — a flood of new output amid stagnating demand.
Those lackluster performances in a key business line come as US President Donald Trump ramps up threats to lay steep tariffs on Canada and Mexico, both of which are crucial sources of crude for US-based refineries. Such levies — which Trump said may take effect as soon as the weekend — would increase the cost of making everything from gasoline and diesel to jet fuel.
The president vowed Thursday to follow through on long-promised 25% tariffs on Canadian and Mexican products, though he declined to say whether oil would be included in the list. His self-imposed effective date is Feb. 1.
Refineries in the US Midwest depend on Canadian oil for as much as three-fourths of their crude inputs. Meanwhile, Mexican supplies have long been a staple of Gulf Coast fuel-making plants designed to maximize output from so-called heavy crude.
Exxon’s full-year refining earnings dropped to $4 billion from $12.1 billion in 2023, according to a statement Friday. As for Chevron, its global fleet of plants earned just $1.7 billion last year, down from $6.1 billion.
The fourth-quarter was especially stark for Chevron’s US refineries, which lost almost $350 million, according to a company release.
“The largest downside surprise came from the oil major’s US refining segment, which reported its first quarterly loss since early 2021 and was well below expectations,” said Peter McNally, an analyst at Third Bridge.
Exxon shares rose 0.3% in pre-market trading. Chevron fell 1.6%.
Levies on Canada and Mexico could curtail shipments of roughly 4 million barrels a day of oil from the north and 500,000 barrels a day from the south. The nations are the top two sources of foreign crude for US refiners.
Valero Energy Corp., the third-largest independent US refiner by market value, on Thursday warned that the industry may cut fuel production if Trump carries out his tariff threat. Mexico is Valero’s biggest source of oil. Independent refiners are those that don’t drill for crude.