These 5 Under-the-Radar Stocks Are Profiting from Oil Refining

U.S. refiners are making record money in 2026. Restricted shipping through the Strait of Hormuz has driven diesel margins to historic highs, and oil-processing stocks have risen 125 to 206 % since January. But what matters more for their value is how much they earn once the market calms down—and the companies differ significantly on that front.

Why refiners are worth watching

Refiners sit between oil production and the gas station. Their profits are determined not by the price of oil, but by the difference between what they pay for crude and what they sell gasoline, diesel and jet fuel for. In 2026, that spread widened to levels the market has never seen. The conflict between the U.S. and Iran restricted exports from the Persian Gulf, which supplies fuel to Asia, Africa and Europe, while Russia also banned diesel exports through the end of the year. U.S. refiners, with cheap domestic crude and export terminals, became one of the world’s main fuel suppliers.

There is no reliable data on retail investors’ attention, so claims that these stocks are “under the radar” can only be assessed indirectly. ExxonMobil has a market capitalization of 732 billion USD and a weight of approximately 0,9 % in a fund tracking the S&P 500. Marathon (131 billion USD), Valero (126 billion USD) and Phillips 66 (116 billion USD) each have a weight of around 0,1 % in the same fund and are followed by a wide range of analysts. HF Sinclair (22 billion USD) is not in the S&P 500, and PBF Energy (10 billion USD) is part of the Russell 2000 small-cap index. So they are less closely followed relative to integrated giants, not in absolute terms.

Refiner stocks are trading near historic highs and their earnings are surging. The key is to distinguish temporary crisis margins from lasting profitability and understand why five companies with seemingly similar businesses react very differently to the same market.

How refiners actually make money

From a barrel of crude to a margin

A refinery buys crude oil and intermediate products and uses distillation and conversion units to make gasoline, diesel, jet fuel, asphalt, propane and petrochemical feedstocks. It sells products to wholesale customers, on the spot market, for export or to gas stations. Profit is what remains after operating expenses, energy (mainly natural gas), transportation, regulatory fees, depreciation, interest and taxes.

Cash operating costs in the 2nd quarter of 2026 ranged from 4,70 USD per barrel at Valero, through 5,72 USD at Marathon, to 7,93 USD at HF Sinclair and 8,00 USD at PBF Energy. Companies calculate these costs somewhat differently, but the difference in scale and efficiency is still clear.

A crack spread is not profit

A crack spread is the difference between the market price of selected refined products and the price of crude oil. The best-known version, 3-2-1, assumes that three barrels of crude produce two barrels of gasoline and one barrel of diesel. It is an indicative benchmark that does not account for a specific refinery’s product mix, discounts on heavier crude, transportation or costs. The share of the benchmark spread a company actually captures is expressed as its so-called capture rate. Marathon reported 112 % for the 2nd quarter of 2026.

Four measures need to be distinguished:

• Oil price: an input cost, not a measure of profit.

• Crack spread: a market benchmark for a particular region and product mix.

• Refining margin: the actual realized difference between revenue and inputs per barrel; each company defines it differently.

• Net income: the result after operating expenses, depreciation, interest and taxes.

At Marathon in the 2nd quarter of 2026, the Refining & Marketing segment margin reached 36,33 USD per barrel. After deducting operating costs of 5,72 USD and distribution costs of 5,88 USD, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) came to 24,84 USD, from which turnarounds (1,03 USD), depreciation (1,53 USD), interest and taxes still had to be paid.

Why cheaper crude can mean higher profits

Product prices are driven by supply and demand for products; crude prices are driven by supply and demand for crude. In 2026, the two markets diverged. By late August, crude exports from the Persian Gulf had recovered to 70 to 80 % of prewar levels, while refined-product exports were only around 40 %. When the International Energy Agency accelerated the release of emergency reserves on 16. 10. 2026 and Brent fell in price, diesel margins remained high. Crude can be rerouted within weeks, but increasing diesel yields at existing refineries takes entire quarters.

The reverse happens when crude prices rise because of a production outage and fuel demand is weak. Refiners then pay more for feedstock but cannot pass the increase on in product prices. Inventory accounting also affects results: in the 1st half of 2026, HF Sinclair reversed 642 million USD in previous inventory write-downs to market value.

Why two refineries earn different amounts

• Capacity utilization: fixed costs are spread over more barrels. HF Sinclair’s Midcontinent refineries ran at 104,8 % in the 2nd quarter of 2026, while its Western refineries ran at 87,9 %.

• Region: Marathon realized a margin of 41,28 USD per barrel on the West Coast, compared with 33,68 USD in the Midcontinent.

• Crude quality and complexity: more complex refineries can process cheaper heavy, high-sulfur crude into more expensive products.

• Product mix: in 2026, diesel is earning significantly more than gasoline.

• Outages: the Martinez refinery fire cost PBF Energy most of its California production for more than a year.

• Regulation: mandatory biofuel blending cost PBF 331,3 million USD in the 2nd quarter of 2026, while HF Sinclair gained 485 million USD in 2025 thanks to exemptions for small refineries.

• Exports: Gulf Coast refineries sell to Latin America and Europe, while inland refineries are tied to local markets.

The 2026 market: record margins

Hormuz and the diesel shortage

According to the EIA (the U.S. Energy Information Administration), the gasoline spread in the 2nd quarter of 2026 was 60 % higher than a year earlier, while spreads for diesel and jet fuel were more than double. U.S. refineries processed more crude in the 2nd quarter than in any year since 2019, even though capacity was 4 % higher then. In August, the spread between diesel and WTI crude exceeded 100 USD per barrel for the first time in history.

The crisis does not benefit all refineries equally. European and Asian processors dependent on Persian Gulf crude are constrained by feedstock shortages. U.S. companies, by contrast, benefit from WTI crude, which was approximately 11 USD cheaper than Brent on 21. 10. 2026 (97,85 vs. 109,16 USD).

Capacity, inventories and exports

• Capacity: according to the EIA’s refinery capacity report, as of 1. 1. 2026 the U.S. had operable capacity of 18,2 million barrels per day, more than 250 thousand less than a year earlier and below the 2020 peak of 18,98 million. Since then, refining at Valero’s Benicia facility (145 thousand barrels per day) has ended.

• Utilization: in the week ending 16. 10. 2026, U.S. refineries ran at 93,4 %.

• Inventories: distillate inventories stood at 104,3 million barrels, roughly 9 % below the five-year average. On the East Coast, they were 32 % below average in September.

• Exports: diesel and gasoil exports reached approximately 1,9 million barrels per day in the first half of October, compared with 1,4 million in September.

• Demand: domestic distillate consumption in the four weeks ending 16. 10. was 2,4 % lower than a year earlier, so high prices are already weighing on it.

What is temporary and what is structural

The EIA’s short-term outlook of 6. 10. 2026 anticipates a gradual decline in refining spreads, which it nevertheless expects to remain above the historical average. Distillate inventories are expected to stay below the 2021 to 2025 average through the end of 2027. The average WTI price is forecast to fall from 88 USD in 2026 to 80 USD in 2027.

Temporary factors include restrictions in Hormuz, Russia’s export ban and low inventories. These can reverse quickly, and stock prices are likely to react before earnings do. The structural factor is the decline in U.S. capacity of roughly 4 to 5 % since 2020, concentrated mainly in California. Countering it is the slow, long-term erosion in gasoline demand due to more fuel-efficient cars and electric vehicles. Meanwhile, the EIA estimates total U.S. consumption of liquid fuels at a stable 20,6 to 20,8 million barrels per day for 2026 and 2027.

Marathon Petroleum

The largest refining system in the U.S.

Marathon operates 13 refineries with capacity of 2,99 million barrels per day across the Gulf Coast, Midcontinent and West Coast. Its Galveston Bay refinery is the largest in the U.S. by maximum daily capacity. In the 2nd quarter of 2026, it processed 2,94 million barrels per day at 94 % utilization, of which 48 % was cheaper high-sulfur crude, and produced 1,44 million barrels of gasoline and 1,13 million barrels of distillates per day. It sells products through Marathon-branded stations, ARCO dealers on the West Coast and exports.

MPLX as a stabilizer

The Midstream segment consists primarily of MPLX, a controlled company that operates pipelines, product pipelines and terminals, and processes natural gas and fractionates natural gas liquids (NGL). Revenue comes mainly from volume-based fees, not margins. The segment’s adjusted EBITDA was 6,54 billion USD in 2024 and 6,75 billion USD in 2025, or 54 % and 53 % of segment EBITDA, respectively. As a result, Marathon’s total adjusted EBITDA grew from 11,3 to 12,0 billion USD in years of weaker margins.

This stability should be interpreted cautiously. Refining paid MPLX fees of 3,90 USD per barrel in the 2nd quarter of 2026, so some Midstream profit comes from the refining business itself. Processing gas and NGL for third parties represents the main source of genuine diversification. Management expects MPLX distributions to grow 12,5 % annually in 2026 and 2027, which would take its annual rate to more than 3 billion USD for Marathon, roughly three times Marathon’s dividend (4,00 USD per share, about 1,1 billion USD annually).

Results, cash and balance sheet

• Net income attributable to MPC: 9,7 billion USD (2023), 3,4 billion USD (2024), 4,0 billion USD (2025, adjusted 3,3 billion USD), 5,6 billion USD (1st half of 2026).

• Adjusted EBITDA in the 2nd quarter of 2026: 8,5 billion USD, of which refining and marketing contributed 6,66 billion USD and Midstream 1,78 billion USD.

• Operating cash flow: 8,7 billion USD (2024) and 8,3 billion USD (2025).

• Returned to shareholders: 10,2 billion USD (2024), 4,5 billion USD (2025) and 2,8 billion USD in the 2nd quarter of 2026, with 6,1 billion USD remaining under the authorization.

• 2026 investment: 1,5 billion USD excluding MPLX (35 % maintenance), with MPLX investing an additional 2,9 billion USD in growth.

Consolidated debt was 32,8 billion USD as of 30. 6. 2026, of which 25,6 billion USD was attributable to MPLX. Marathon itself had debt of 7,2 billion USD and cash of approximately 6,8 billion USD, so it had virtually no net debt. Enterprise value (EV) of 165 billion USD therefore includes debt and non-controlling interests in MPLX, distorting direct multiple comparisons.

Valero Energy

The lowest-cost refiner

Valero operates 14 refineries in the U.S., Canada and the U.K., with capacity of around 3,0 million barrels per day. For the 3rd quarter of 2026, it planned to process 1,78 to 1,83 million barrels per day in the Gulf Coast region, 460 to 480 thousand in the Midcontinent, 450 to 470 thousand in the North Atlantic and just 110 to 120 thousand on the West Coast after ending refining in Benicia. Its focus on the Gulf Coast means access to exports and cheaper heavy crude, while cash costs of 4,70 USD per barrel are the lowest of the five.

Results for the 3rd quarter of 2026, released on 22. 10. 2026, showed the strength of this leverage: refining operating income of 8,8 billion USD versus 1,6 billion USD a year earlier and net income of 6,8 billion USD (23,89 USD per share). At processing rates of 3,0 million barrels per day, that works out to operating income of roughly 32 USD per barrel. Refining accounted for 93 % of segment operating income. The company completed a catalytic cracking optimization at St. Charles, but dealt with a fire at Port Arthur in the 2nd quarter.

Renewable fuels: stability or volatility?

Valero consolidates Diamond Green Diesel (DGD), a joint venture with Darling Ingredients with annual capacity of 1,2 billion gallons of renewable diesel and jet fuel, and owns 12 ethanol plants. The renewable diesel segment lost 79 million USD in the 2nd quarter of 2025 and 28 million USD in the 3rd quarter of 2025, then earned 717 million USD (2nd quarter) and 353 million USD (3rd quarter) in 2026. Results are determined by emissions credit prices, clean-fuel tax support and prices for fats and oils. The segment therefore adds policy-dependent volatility and grew alongside refining in 2026, so it does not act as a hedge against weak margins.

Balance sheet and capital returns

Valero’s net income was 8,8 billion USD in 2023, 2,8 billion USD in 2024 and 2,3 billion USD in 2025 (adjusted 3,3 billion USD, with the difference mainly due to a 1,1 billion USD write-down of California assets). For the first three quarters of 2026, it was 11,8 billion USD, more than in the whole of 2022 (11,5 billion USD). As of 30. 6. 2026, Valero had debt of 9,1 billion USD, leases of 2,2 billion USD and cash of 7,9 billion USD; it repaid 526 million USD of bonds in the 3rd quarter. It returns at least 40 to 50 % of adjusted operating cash flow to shareholders, amounting to 4,0 billion USD (67 %) in 2025. The share count has fallen 30 % in five years.