Key insights
- Valero Energy, Marathon Petroleum, and Phillips 66 are projected to report record third-quarter profits due to global fuel shortages exacerbated by conflicts in the Middle East and Ukraine. Widening crack spreads and reduced global refining capacity are driving these gains. Analysts expect significant year-over-year earnings growth for all three companies, which have recently reached record stock prices. Results are expected in late October and early November.
Investing.com - America's largest independent oil refiners are projected to report sharply higher third-quarter earnings, driven by global fuel shortages stemming from conflicts in the Middle East and Ukraine.
Wall Street analysts expect Valero Energy (NYSE: VLO), Marathon Petroleum (NYSE: MPC), and Phillips 66 (NYSE: PSX) to surpass their near-record second-quarter profits posted in June. JPMorgan analysts project Valero could report $8.95 billion in pretax earnings in the third quarter, up 50% from the prior three-month period and 24% higher than its quarterly record in mid-2022. Piper Sandler forecasts Marathon's per-share earnings will rise more than sevenfold from the same period last year, while Phillips 66's refining earnings are also expected to eclipse its past record.
Refineries are benefiting from widening crack spreads, with crude oil prices rising at a slower rate than refined fuel prices. The difference between crude prices that Valero's Gulf Coast refineries buy and the fuel prices they charge widened to an average $47.11 a barrel in the third quarter, up from $30.28 three months earlier. Domestic diesel prices recently reached a record $6.53 a gallon on average.
Global refining capacity has tightened as conflicts disrupt production. Ukraine has struck about 15 Russian oil-refining sites since late July, bringing nearly 2 million barrels a day of capacity offline. China and other Asian countries have reduced fuel exports, leaving the U.S. as the world's last major fuel supplier. As of September, 12.1% of the world's refining capacity was offline, according to Industrial Info Resources.
The three refiners closed Thursday at record stock prices and have more than doubled in 2026, gaining about $224 billion in combined market value. The companies are scheduled to report results in late October and early November. Last month, President Trump's team called U.S. refining executives to the White House to discuss ways to boost refining capacity ahead of November's midterm elections.