Oil Price Surge Sets Stage for Record Cash Flow in Refiners and Power Equipment Suppliers

Oil prices have surged past $100 per barrel on the Brent benchmark for the first time in two months, driven by concerns over a wider supply disruption following attacks on Saudi oil tankers and the collapse of the US-Iran ceasefire.

The escalating conflict has reignited fears of a lasting de-escalation that could pull oil prices back to pre-war levels. However, refineries are posting wide margins in response to the surge in crude prices, with some of the widest spreads in decades.

Refiners like Valero Energy and Marathon Petroleum are positioned to benefit from these high margins, as they are unable to expand their capacity due to permitting hurdles. As a result, they will likely funnel record cash flow into buybacks and dividends instead of reinvestment.

In addition to refiners, companies that supply power equipment to data centers, such as GE Vernova, are also poised to benefit from the AI buildout. The company's backlog grew 88% organically in Q2, with orders exceeding $24.2 billion and a revenue target of $45.5 billion to $46.5 billion for 2026.

Ecovyst Inc., which regenerates sulfuric acid for refiners, is also well-positioned to benefit from the refining margins, as it holds more than 50% market share in this business.