Phillips 66’s refining segment reported a gross margin of $25.50 per barrel in the first quarter, up from $18.20 per barrel a year earlier, as the average cost of light sweet crude fell by 12% compared to the prior-year period. Lower input costs for Brent and West Texas Intermediate grades have reduced feedstock expenses by approximately $4.00 per barrel, contributing directly to a 40% year-over-year improvement in refining profitability. The company processed 2.1 million barrels per day of crude, maintaining a utilization rate of 93%, one of the highest levels among U.S. independent refiners.

The spread between light sweet and heavy sour crudes has widened to $15.30 per barrel, versus $8.70 per barrel twelve months ago, providing Phillips 66’s midstream and logistics network with arbitrage opportunities that generated an additional $75 million in quarterly contribution. The company’s 240,000 barrels-per-day Sweeny upgrader in Texas captured value by converting discounted Maya and Arab heavy grades into higher-yield distillates, boosting conversion margins by 25% over the first quarter average.

With refining cash flow increasing by 30% year-over-year to $1.8 billion, Phillips 66 has reaffirmed its 2026 capital program at $2.5 billion, allocating 60% toward reliability projects and capacity expansions at its Rodeo and Baton Rouge facilities. The board declared a quarterly dividend that represents a 2% increase over the previous payout, reflecting management’s confidence in sustained free cash flow generation. The dividend yield now stands at 3.8%, supported by a net debt-to-EBITDA ratio of 1.9x, well within the company’s target range of 1.5–2.5x.