CVR Energy, one of the largest publicly traded refiners in the United States, is approaching a $4 billion agreement to acquire several refineries from Marathon Petroleum. This agreement, which is expected to be announced soon, comes at a time when the refining market has been significantly impacted this year due to geopolitical crises in the Middle East and the Russia-Ukraine war.
Refining Market Conditions
Refining margins for Gulf Coast operators reached a historic high of $72 per barrel in September. This increase was driven by refining disruptions in the Middle East and Russia, as well as fuel shortages in the global market. Although margins have decreased from that peak, they remain significantly higher compared to a year ago.
CVR Energy, 71% owned by Carl Icahn, is recognized as the seventh largest publicly traded refiner in the United States. However, its market value of approximately $6 billion is significantly less than Marathon's market value of $125 billion. Nevertheless, CVR Energy is seeking to expand its operations in the refining industry.
Other Developments in the Refining Industry
In this context, Valero recently acquired a dormant refinery in Houston and plans to restore its production to 165,000 barrels per day. Additionally, other major companies such as Exxon and Chevron are investing in their refining businesses and increasing production at their existing refineries.
The ongoing wars around the world highlight a shortage of refineries globally, as many facilities have either been shut down or converted to biofuel production units. Particularly in Europe, the continent is facing challenges in securing imported fuels, having closed about a quarter of its refineries over the past two decades.
