Refiner Stocks Surge Amid Global Refining Capacity Shortage
The global refining capacity shortage has driven refiner stocks to surge in recent months. The VanEck Oil Refiners ETF (CRAK) is up about 24% since the start of the U.S.-Iran war, outperforming both the energy sector and the broader market.
Some of the biggest refiners have seen much larger gains, with Marathon Petroleum (MPC) up 59%, Valero Energy (VLO) climbing 52%, and Phillips 66 (PSX) rising 36% since the war began. The key driver behind this performance is the crack spread, which reflects the difference between crude oil prices and refined product prices.
The 3-2-1 crack spread for U.S. refiners has reached a new high of $64 due to the shortage of refining capacity. Even if conflicts in the Persian Gulf end tomorrow, it will take much longer to restore global demand for petroleum products.
Goldman Sachs raised its price target for Valero from $286 to $357, suggesting a 14% upside from the current price.