The soaring oil price breaks through the hedging layout! Phillips 66 (PSX.US) crude oil short position is "blood washed", expected to incur a huge loss of $1 billion in Q1.

One of the largest oil refiners in the United States, Phillips 66 (PSX.US), expects to suffer nearly $1 billion in losses in the first quarter due to a significant spike in crude oil and related fuel prices caused by the Middle East conflict. According to a regulatory filing submitted on Monday, the refining company anticipates a negative impact of about $900 million on its standard net short positions in crude oil, refined products, natural gas liquids, and renewable fuel feedstock-related derivative contracts. Although Phillips 66 expects losses from its contracts tracking commodity prices, the value of physical crude oil and fuel held by the company has increased with rising prices, partially offsetting the losses incurred by these financial hedges. The Middle East conflict has disrupted transportation through the critical Strait of Hormuz. Approximately a quarter of global seaborne crude oil shipments pass through this waterway. Since the conflict began, U.S. crude oil prices have surged by nearly 68%, while diesel futures have climbed by 62%. Due to the increase in commodity prices, Phillips 66 has also paid about $3 billion in collateral fees for its derivative positions. The company subsequently secured a new $22.5 billion term loan with a 364-day maturity, and expanded its asset securitization financing facility from $1.25 billion to $1.75 billion.