Asian fuel suppliers eye US West Coast market amid California refinery closures

With two California refineries set to close in the coming months, major Asian oil product suppliers, including South Korean refiners and trading houses operating in Singapore, are keen to explore gasoline and jet fuel export opportunities to the US West Coast.

However, the Trump administration's international trade, tariff and diplomatic policies pose risks to making any commitments to regular cross-Pacific clean oil product sales, according to refinery product sales executives and trading managers interviewed by Platts.

Phillips 66 expects to complete the shutdown of its 138,700 b/d Los Angeles-area refinery in Wilmington, California, by the end of September. And despite California's legislators sweetening offers to Valero to keep its 145,000 b/d Benicia refinery open, the San Francisco-area plant is slated to close in April 2026. The two closures will reduce the state's 1.62 million b/d refining capacity by almost 18%.

California lawmakers, known for their stringent policies on refiners, have postponed the implementation of legislation designed to mitigate gasoline price rises during unplanned refinery maintenance. They attributed this decision to increased imports, which have been crucial in stabilizing wholesale and retail prices throughout the spring and summer.

The decline in USWC self-sufficiency in transportation fuels opens the door for Asia-wide refiners to export gasoline, jet fuel and diesel across the Pacific. Realistically, however, South Korea stands out as a supplier capable of providing a regular and stable term-based supply commitment to USWC buyers, according to middle distillate sales managers at South Korean, Japanese, Malaysian and Thai refiners.

With a total refining capacity of about 3.4 million b/d and 2024 oil demand of around 2.6 million b/d, South Korea holds a surplus output capacity of nearly 1 million b/d. Most other Asian nations have refining capacities that can only meet their domestic demand, while many Southeast and South Asian countries fall below that threshold and rely on imports to fill supply gaps, refinery product sales managers said.

South Korean refiners, including SK Innovation, Hyundai Oilbank and GS Caltex, exported a combined 23,881 b/d of gasoline and 113,595 b/d of jet fuel to the US in the first seven months of 2025, up 19.6% and 12.2% year over year, respectively, the latest data from state-run Korea National Oil Corp. showed.

Meanwhile, refiners in Japan, Malaysia and Thailand, including ENEOS, indicated that they are keen to assess the economics and profitability, as well as the supply and demand balance outlook, in the USWC for clean oil product export opportunities. However, spot-based sales seem to be a more prudent option than committing to lengthy and regular term-based supply contracts with any buyers in the USWC.

US policy, business risks

South Korean refiners indicated that they are adopting a cautious stance on oil product export opportunities to the USWC, influenced by recent geopolitical developments and US immigration policies.

"As we strategize for exports, it's probably prudent to align with the government's policies and the shifting political landscape with the US," said a marketing manager at a South Korean refiner based in Ulsan, who spoke on condition of anonymity to discuss business strategy.

The Trump administration's trade policies have created significant uncertainty, according to middle distillate sales executives at three major South Korean refiners, highlighting the recent immigration raid at a Hyundai facility in Georgia.

The complexity of US tariffs requires a cautious approach to imports and exports, said refinery product sales executives.

Although sales opportunities in the US, Europe and Africa are viewed as potential bonuses, they are not the primary focus for South Korean refiners. The current political climate and recent events have created a general wariness about future sales prospects in the USWC.

Trading houses

Trading houses operating in Singapore also indicated that when prices and margins pan out, they may be willing to seek spot trade deals with any keen USWC buyers. However, committing to any term-supply contracts may require some time to assess the supply-demand balance.

International traders such as Mitsui, Vitol, Marubeni, Glencore, Trafigura, and others utilize Singapore's strategic location and extensive storage infrastructure to manage their oil inventories and facilitate exports, according to traders handling the Asia-Pacific spot market at the companies based in Singapore.

By storing oil products in Singapore, it's possible to efficiently respond to market demands, including supplying gasoline and jet fuel to the US market.

This allows traders to take advantage of price fluctuations and optimize their trading operations, according to Singapore-based traders at one Japanese integrated trading company and two Western trading houses.