⚠ The Downstream Is Being Closed Outside North AmericaModerate threat

ExxonMobil (XOM) — threat to the moat

European throughput down sixteen per cent in a year and Asian down twenty-eight: the returns improve as the hedge disappears.

Between the second quarters of 2025 and 2026, ExxonMobil's refinery throughput in Europe fell from 969 to 814 thousand barrels a day and in Asia Pacific from 442 to 317 — sixteen and twenty-eight per cent respectively, in twelve months1. Worldwide throughput fell from 3,936 to 3,5622. The United States was roughly flat at 1,908 against 1,969.

Worldwide refinery throughput, thousand barrels a dayQ2 2025Q1 2026Q2 2026Europe -16% and Asia Pacific -28% year on year; the US was roughly flat.
The returns improve as the asset base shrinks, and the hedge shrinks with it.

The strategic logic is sound. A European refinery built decades ago, running on imported crude, paying European energy and labour costs and competing against plants in the Middle East and India built in the last ten years, cannot earn its cost of capital across a cycle. ExxonMobil has been acting on that conclusion: Singapore retail fuels sold, Mobil Argentina sold, French Product Solutions affiliates sold, Thailand exited3.

The consequences are two, and they pull in opposite directions. Energy Products return on average capital employed rose from 11.7 per cent in 2024 to 19.7 per cent in 20254, partly because the remaining assets are the good ones. And the internal hedge that justifies owning a refining business inside a producer narrows every time a plant goes, since the offset against a rising crude price is proportional to how much crude the company buys.

There is a third consequence that is harder to price. The remaining system concentrates on the United States Gulf Coast — where ExxonMobil has the feedstock advantage, the chemical integration and the export position, and where a hurricane, a fire or a regulatory change reaches a much larger share of the segment than it did five years ago. Management cited strong Gulf Coast utilisation and record diesel production as drivers in the second quarter of 20265, which is the upside of the same concentration.

Follow the ratio of refinery throughput to production: 3,979 against 4,736 thousand barrels a day in 20256, a little over eight tenths. Each further closure lowers it. Below roughly a half, the integration argument stops carrying weight and ExxonMobil should be read as an exploration and production company with a Gulf Coast manufacturing business attached.

References
  1. ReportedBetween the second quarters of 2025 and 2026, ExxonMobil's refinery throughput in Europe fell from 969 to 814 thousand barrels a day and in Asia Pacific from 442 to 317 — sixteen and twenty-eight per cent respectively, in twelve months.
    ExxonMobil Holdings Corporation Form 10-Q for the quarter ended 30 June 2026, Management's Discussion and Analysis — the review of second quarter results, the segment earnings driver analyses for Upstream, Energy Products, Chemical Products and Specialty Products, the operational results tables for production, refinery throughput and sales volumes, the liquidity discussion, and the structural cost savings calculation. — Q2 2026 · publ. August 2026 · source ↗
  2. ReportedWorldwide throughput fell from 3,936 to 3,562.
    ExxonMobil Holdings Corporation Form 10-Q for the quarter ended 30 June 2026, Management's Discussion and Analysis — the review of second quarter results, the segment earnings driver analyses for Upstream, Energy Products, Chemical Products and Specialty Products, the operational results tables for production, refinery throughput and sales volumes, the liquidity discussion, and the structural cost savings calculation. — Q2 2026 · publ. August 2026 · source ↗
  3. ReportedExxonMobil has been acting on that conclusion: Singapore retail fuels sold, Mobil Argentina sold, French Product Solutions affiliates sold, Thailand exited.
    ExxonMobil Holdings Corporation and Exxon Mobil Corporation Form 10-Q for the quarter ended 30 June 2026, condensed consolidated financial statements and notes — statement of income, balance sheet, segment note, litigation and other contingencies including the Louisiana coastal settlement, and divestment activities. — Q2 2026 · publ. August 2026 · source ↗
  4. ReportedEnergy Products return on average capital employed rose from 11.7 per cent in 2024 to 19.7 per cent in 2025, partly because the remaining assets are the good ones.
    Exxon Mobil Corporation Form 10-K for FY2025, Business Profile (Financial) — earnings after income taxes, average capital employed, return on average capital employed and cash capital expenditures for each segment and geography, and the corporate total. — FY2025 · publ. February 2026 · source ↗
  5. ReportedManagement cited strong Gulf Coast utilisation and record diesel production as drivers in the second quarter of 2026, which is the upside of the same concentration.
    ExxonMobil Holdings Corporation second-quarter 2026 earnings release (Exhibit 99.1 to Form 8-K of 31 July 2026) — earnings and volume summary by segment on both a GAAP and an adjusted basis, cash flow from operations excluding working capital, free cash flow, cash capital expenditures by segment, structural cost savings, adjusting items, and the chief executive's commentary. — Q2 2026 · publ. 31 July 2026 · source ↗
  6. Moat Explorer calcFollow the ratio of refinery throughput to production: 3,979 against 4,736 thousand barrels a day in 2025, a little over eight tenths.
    Moat Explorer calculation from ExxonMobil's reported figures. Crude oil and product purchases of $184,248 million against total costs and other deductions of $290,970 million is 63.3% (2024: $199,454m of $300,712m = 66.3%; 2023: $193,029m of $291,799m = 66.2%). Intersegment revenue of $121,005 million against gross segment revenue of $452,209 million is 26.8%. Depreciation and depletion of $25,993 million against sales of $323,905 million is 8.0% (2023: $20,641m of $334,697m = 6.2%). Income tax of $11,504 million on pre-tax income of $41,268 million is 27.9% (2024: $13,810m of $48,873m = 28.3%; 2023: $15,429m of $52,783m = 29.2%). Revenue outside ASC 606 of $96,996 million of $323,905 million is 29.9% (2024: 27.7%; 2023: 23.4%). The three downstream segments sum to $17,493m (2023), $9,662m (2024) and $11,080m (2025), a rise of $1,418m in 2025 against an Upstream fall of $4,036m. Refinery throughput of 3,979 against production of 4,736 thousand barrels a day is 0.84. Specialty Products earned $2,857m on 7,791 thousand tonnes ($367/t) against $3,052m on 7,666 ($398/t). Free cash flow of $51,970m less $28,358m is $23,612m against distributions of $17,231m plus $20,273m = $37,504m. Energy Products averaged $7.9 billion a year across 2023-2025. — FY2023-FY2025 · publ. September 2026 · source ↗
Sources
Generated September 23, 2026