Marathon Leaning Into Unusual Fuel Voyages During Iran War

Marathon CEO Maryann Mannen said the company is “largely insulated” from the war’s supply constraints and has taken advantage of exporting opportunities. (Al Drago/Bloomberg)

Marathon Petroleum Corp. sent fuel tankers on a range of atypical routes in the first months of the war in Iran, taking advantage of disruptions in supply for gasoline, diesel and jet fuel, executives said May 5.

Ohio-based Marathon, the largest refiner in the U.S., primarily sources its crude from the U.S. and Canada. CEO Maryann Mannen said during an earnings call that meant the company is “largely insulated” from the war’s supply constraints and has taken advantage of exporting opportunities.

With the Strait of Hormuz shut to most traffic, the role the U.S. plays in shipping crude and fuels has shifted dramatically. Countries that typically rely on oil from the Middle East and products refined from that crude have turned to alternatives from around the world. Total American crude and product exports hit a record last week, according to data from the Energy Information Administration.

The company’s fuel made the following unusual voyages in the first quarter, according to Chief Commercial Officer Rick Hessling: for the first time, ultra-low-sulfur diesel from Los Angeles to Australia; naphtha to Asia; jet fuel from the Gulf Coast to Alaska; alkylate from the Gulf Coast to Los Angeles; and “various Jones Act waiver moves” around Los Angeles and the Pacific Northwest.

Within the U.S., foreign-flagged ships are carrying fuel between ports amid an extended Jones Act waiver. When the law is in force, it only allows more expensive U.S.-flagged vessels to transport goods within the country.

The company “leaned into” Jones Act waivers, Hessling said. It also sees “strong markets” for fuel exports into Europe and Latin America, he said.