Refiner Stocks Surge Amid Global Refining Capacity Shortage

The global oil refining industry has experienced significant gains due to high crude prices. This is attributed to Iran's effective closure of the Strait of Hormuz, which has led to a shortage in refining capacity.

According to the VanEck Oil Refiners ETF (CRAK), refiner stocks have surged 24% since the start of the U.S.-Iran war, outperforming both the energy sector and the broader market. The S&P 500 index has risen only 7.5% over this period.

Individual companies such as Marathon Petroleum (MPC) are up 59%, Valero Energy (VLO) has climbed 52%, and Phillips 66 (PSX) is up 36%. This significant increase can be attributed to crack spreads, which reflect the difference between crude oil prices and refined product prices.

A global refining capacity shortage exists due to wars in Ukraine and the Persian Gulf, as well as pandemic-era closures and aging infrastructure. As a result, the 3-2-1 crack spread for U.S. refiners has reached a new high of $64.