U.S. Refinery Capacity Dropped in 2025
Large refinery closures in Houston and Los Angeles reduced domestic processing capacity for fuel and oil products.
Updated on Oct. 4, 2026 in Oil and Gas
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U.S. operable refinery capacity fell to 18.16 million barrels per calendar day by Jan. 1, 2026, down from 18.42 million barrels the year prior. This decrease of 263,000 barrels per day occurred as major facility closures in 2025 offset gains elsewhere.
Why it matters
The decline in processing infrastructure forces operators to navigate a tighter supply environment, impacting downstream fuel costs and logistics across regional markets. These closures represent a structural shift in how domestic crude is converted into finished products.
Operable capacity fell by 263,000 barrels per day throughout 2025, driven by the removal of 402,000 barrels per day from closures in Houston and Los Angeles. These losses were partially mitigated by expansions at other existing facilities.
The players
LyondellBasell
A multinational chemical and refining company that operates large-scale industrial processing facilities.
Phillips 66
A major energy manufacturing and logistics company with a significant footprint in U.S. refining and midstream operations.
The details
The capacity contraction was driven by LyondellBasell stopping crude processing at its 263,776-barrel-per-day Houston facility in Q1 2025 and Phillips 66 shuttering its 138,700-barrel-per-day Los Angeles refinery in October. While these shutdowns removed significant volume, incremental capacity additions at other U.S. refineries provided a partial buffer. Operators should note these shifts as net crude imports averaged 2.2 million barrels per day over the same period.
Timeline
LyondellBasell stopped processing crude at its Houston refinery in Q1 2025.
Phillips 66 stopped operations at its Los Angeles refinery in October 2025.
Total U.S. refinery capacity decreased throughout 2025.
Operable capacity stood at 18.16 million barrels daily on Jan. 1, 2026.
Market Landscape
This decline follows a long-standing industry trend of capacity rationalization where older or less efficient sites are consolidated to favor newer, more integrated assets. It reflects a wider pattern of domestic infrastructure adjustments as refiners respond to changing logistics and market demand.
Business operators reliant on refined fuel products should monitor regional supply gaps, as concentrated refinery closures can heighten local price sensitivity. Track your logistics and energy surcharges closely as current net import levels indicate the market remains dependent on external inflows.
The takeaway
The reduction in domestic refining capacity is a signal for operators to build more flexibility into their fuel procurement strategies to account for potential regional supply volatility. Monitor local energy cost benchmarks closely throughout the next fiscal quarter to adjust your operating budgets accordingly.
Further reading
For more on industry infrastructure trends, see the Oil and Gas section.
Source note: This article includes information reported by TokenPost.
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