Petron Corp., the country’s only remaining oil refiner, reported a 56 percent drop in first-quarter net income as escalating Middle East tensions and unplanned refinery shutdowns weighed on its bottom line.

In a statement on Tuesday, May 5, Petron said its net income in January to March fell to ₱1.8 billion from ₱4.1 billion a year earlier on the back of volatile crude prices.

Petron added that localized operational hurdles also hampered the company’s ability to capitalize on higher regional demand.

Moreover, the refinery operator’s performance was clipped by significant downtime across its regional footprint. Its Port Dickson Refinery in Malaysia has been offline since November 2025 following jetty damage caused by Tropical Storm Senyar.

At home, the Petron Bataan Refinery in Limay underwent scheduled maintenance during the first quarter, further restricting the company’s ability to produce its own fuel.

While consolidated revenues rose 27 percent to ₱246 billion, fueled largely by higher global oil prices, operating income slumped 36 percent to ₱6.1 billion.

Petron noted that margins were squeezed by elevated product costs and the lack of high-margin contributions from its refining units.

Total sales volume across the Philippines and Malaysia slipped seven percent to 25.7 million barrels from 27.6 million barrels in the same period in 2025.

To protect its home market, Petron said it intentionally reduced fuel exports to prioritize domestic retail and commercial needs.

External pressures were also exacerbated by the widening conflict involving the United States (US), Israel, and Iran, which has threatened crude flows through the Middle East.

Benchmark Dubai crude surged to a peak of $129 per barrel in March 2026. For the full quarter, the benchmark averaged $86 per barrel, a 12 percent increase from the previous year.

Ramon S. Ang, Petron president and chief executive officer, said the geopolitical environment has created severe supply disruptions, forcing the company to pivot its sourcing strategy.

Petron has tapped alternative suppliers outside the traditional conflict zones and is leveraging a diversification program that allows its Bataan facility to process non-Middle Eastern crude grades.

The company is implementing cost-saving measures and efficiency improvements to navigate the high-price environment.

“As the Philippines’ sole remaining oil refiner, we recognize our responsibility to help address the nation's fuel challenges. Together, we will navigate this crisis and alleviate the concerns of our fellow countrymen,” Ang added.

The oil giant has also implemented strict cost-saving and efficiency measures to navigate the current high-price environment. (Gabriell Christel Galang)