Petron Corp., the country’s sole remaining oil refiner, reported a 27 percent drop in its first-half net income as Middle East geopolitical volatility and temporary refinery shutdowns weighed on its financial performance.

In a statement on Tuesday, Aug. 4, Petron said net income for the first six months of 2026 slipped to ₱3.8 billion from the same period last year. Earnings were heavily impacted by record-high crude prices, elevated import premiums, and soaring freight expenses.

External pressures were driven by ongoing conflict involving the United States (US) and Iran, which fueled extreme volatility across global oil markets.

Benchmark Dubai crude peaked at $129 per barrel in March before easing to $79 per barrel in June, according to the oil firm. Overall, Dubai crude averaged $91 per barrel for the first half of the year—a 27 percent surge compared to 2025.

Operational challenges further restricted refining capacity. Output was curtailed by a temporary shutdown at the Port Dickson Refinery in Malaysia and a scheduled first-quarter maintenance turnaround at the company’s Bataan facility in Limay.

To ensure product availability, Petron initiated limited refining operations in Malaysia using existing crude inventory while construction continues on a replacement jetty, set for commissioning in early 2027.

Despite these disruptions, consolidated sales volume rose six percent to 67.9 million barrels. An 86 percent surge in trading transactions by the company’s Singapore subsidiary offset a six percent decline in combined domestic and Malaysian sales, which totaled 52.9 million barrels.

In the domestic retail fuel segment, the company posted a strong 15 percent growth.

Driven by higher prices and volume gains, consolidated revenues jumped 57 percent to ₱605.9 billion. However, elevated operating costs and expensive feedstock squeezed margins, pulling operating income down 17 percent to ₱12.6 billion.

Petron Chairman and Chief Executive Officer Ramon S. Ang assured stakeholders that despite first-half challenges driven by market volatility, the company remains focused on meeting national fuel demand.

“While the first half of the year has been challenging, we are confident that our financial discipline, operational resilience, and competitive strengths will enable us to navigate these temporary headwinds,” Ang said.

To enhance supply reliability, Petron is advancing several key infrastructure developments. Its 180,000-metric-ton annual capacity coco-methyl ester (CME) plant at the Bataan Refinery is nearing completion to secure internal biofuel supplies.

Additionally, the company is expanding terminal capacity, including four new storage tanks in Limay scheduled for completion by early 2028, along with an LPG mounded tank and canister filling unit in Bacolod targeted for late 2028. (Gabriell Christel Galang)