US Refiners Soar as Fuel Shortages and War-Driven Margins Boost Profits

The Iran war has triggered an extraordinary earnings season for US refiners due to fuel shortages and soaring refining margins. Brent crude prices have fallen to around $90 per barrel from a wartime peak of $126, but the shortage of refined fuels has only deepened.

According to Reuters, global refinery throughput in July was nearly 5 million barrels per day below year-earlier levels as Middle Eastern refineries remained constrained and Ukrainian attacks pushed Russian processing close to a 20-year low. US refiners have stepped into the gap, running at or near record utilization rates and exporting more fuel into a market increasingly short of diesel, gasoline, and jet fuel.

Marathon Petroleum (NYSE:MPC) has gained 110% year-to-date, followed by Valero Energy (NYSE:VLO) with a 98% gain and Phillips 66 (NYSE:PSX) at 75%. These three companies have outpaced the S&P 500 Energy sector's 36% gain. With 88% of S&P 500 companies having reported second-quarter results, Energy has delivered the strongest earnings growth of the index's 11 sectors at 147% year-over-year and the strongest revenue growth at 42.5%. The Oil & Gas Refining & Marketing sub-industry leads with earnings growth of 327%, followed by Integrated Oil & Gas at 177% and Oil & Gas Exploration & Production at 117%.