Ampol Posts Record Refinery Margins and Secures Fuel Supply Amid Middle East Conflict
Ampol reported a robust first quarter in 2026, with refinery margins soaring to US$25.45 per barrel and production up 10%, while securing fuel supplies through May despite geopolitical tensions.
- Lytton Refiner Margin jumps to US$25.45 per barrel
- Refinery output rises 10% amid cyclone recovery
- Australian fuel sales increase 4.7% excluding net-sell
- Fuel supply secured through May and crude through July
- Major refinery maintenance postponed to August
Refinery Margins Surge on Middle East Conflict
Ampol Limited (ASX:ALD) kicked off 2026 with a striking boost in profitability at its Lytton refinery, reporting a Lytton Refiner Margin (LRM) of US$25.45 per barrel for the first quarter. This represents a dramatic leap from US$6.07 per barrel a year earlier, largely driven by the geopolitical upheaval in the Middle East and its knock-on effects on global oil shipping routes, particularly the closure of the Strait of Hormuz.
The refinery’s output climbed 10% to 1,434 million litres, rebounding from production lost to Cyclone Alfred in the prior year. This increase underscores Ampol’s operational resilience amid external shocks.
Fuel Sales and Supply Chain Management
Australian fuel sales, excluding net-sell volumes, rose 4.7% year-on-year, reflecting strong demand in convenience retail and wholesale channels. Ampol’s integrated downstream operations and independent trading and shipping capabilities have been pivotal in navigating the supply disruptions caused by the Middle East conflict. The company secured crude oil purchases through July and product imports for diesel and jet fuel through May, with gasoline supplies confirmed until the end of June.
In response to the heightened supply risk, Ampol has deferred the major maintenance turnaround of the Fluidised Catalytic Cracker Unit (FCCU) at Lytton from early June to August, ensuring continued refinery output during a critical period. This move aligns with technical assessments and supports domestic fuel security, complementing the Ultra Low Sulfur Fuels project scheduled to commence after the FCCU maintenance.
Ampol is also collaborating with the Australian Government on temporary amendments to gasoline standards and has secured commercial terms with Export Finance Australia to bolster additional fuel supplies. These steps, alongside a well-positioned hedge book, aim to mitigate market volatility and elevated landed crude costs.
Navigating Uncertainty Amid Supply Chain Volatility
Despite the strong start, Ampol acknowledges ongoing uncertainty around the duration and impact of the Middle East conflict on global supply chains. Consumer and commercial fuel demand in Australia and New Zealand has remained relatively stable, even as input costs have escalated sharply.
This update follows Ampol’s recent strategic moves to enhance domestic fuel production, including payment scheme adjustments and maintenance delays designed to increase output amid global disruptions. These measures were detailed in the company’s March announcement on fuel supply with payment scheme changes, highlighting a proactive approach to managing supply risks.
Ampol’s performance so far this year highlights the strategic advantage of its integrated supply chain and independent trading operations, which have allowed it to adapt quickly to shifting market conditions and geopolitical risks. The company’s ability to secure physical supply and manage price risk will be critical as the situation in the Middle East evolves.
Bottom Line?
Ampol’s strong first quarter and strategic supply management position it well amid ongoing geopolitical uncertainty, but rising crude costs and unresolved conflict duration pose challenges ahead.
Questions in the middle?
- How sustainable are the elevated refinery margins if Middle East tensions ease?
- What impact will deferred maintenance have on Ampol’s refinery performance later in 2026?
- How will government policy adjustments affect Ampol’s fuel supply resilience?
