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Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There?

Authored by Nathan Reiff. Posted: 7/27/2026.

As the war in Iran appears to be intensifying once again, the petroleum industry is facing renewed threats to production and supply after months of prior challenges.

As a result, crack spreads—which measure the difference between the value of refined products and the cost of the crude oil used to produce them—continue to soar. Crack spreads have recently reached record highs and could remain elevated in the near term if production, inventory and refining disruptions persist.

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The ongoing war in Iran has already benefited some U.S. refiners, which are now receiving global demand that was once reserved for the Persian Gulf. At least until the war is resolved—and potentially afterward as well—domestic companies in this space are well-positioned to continue generating strong cash flow and returning value to investors through dividends and share buybacks.

Three oil refiners have seen their share prices soar to all-time highs in recent weeks, and the ongoing conflict may signal even more room to run.

Valero: After 82% Rally This Year, May Still Have Momentum

Valero Energy Corp. (NYSE: VLO) is a nearly $90 billion downstream company with a sizable renewables business in addition to its refining operations.

Shares have skyrocketed about 84% year to date (YTD) amid the unique crack-spread environment.

The company is well-positioned through its Gulf Coast operations to capitalize on bottlenecks in oil refining, which should keep margins elevated in the near to medium term.

Investors will get an update on Valero's financial situation when the company releases Q2 2026 earnings on July 30, but it is heading into the report from a position of strength. In the first quarter of the year, net income attributable to shareholders of $1.3 billion and refining operating income of $1.8 billion represented sharp reversals from the less-impressive results reported in the prior-year period.

Investors may expect the company to continue its aggressive buybacks and dividend payouts as long as its cash windfall from the current oil-refining environment remains in place. With its latest dividend of $1.20 per common share, the company continues to build on its multiyear history of distribution increases while maintaining a dividend yield of about 1.6% and a sustainable payout ratio.

Despite the major rally, Wall Street remains fairly bullish on VLO's potential, with 12 of 21 analysts calling VLO a Buy.

Marathon: Midstream Bonus Provides an Extra Advantage

With returns that are even more impressive than VLO's, shares of Marathon Petroleum Corp. (NYSE: MPC) have risen nearly 89% YTD.

The company's footprint includes refinery operations in both the Gulf Coast and the Midwest, allowing it to benefit from crack spreads in much the same way as Valero.

Setting Marathon apart, however, is the master limited partnership MPLX LP (NYSE: MPLX), which Marathon created more than a decade ago and in which it still retains a significant investment. MPLX provides a crucial stream of income from its midstream business, diversifying Marathon's refining operations while benefiting from a different set of bottlenecks in the midstream space.

Even without factoring in MPLX, Marathon has been performing very well. The firm ran its refineries at 89% utilization in Q1 2026, completing about 40% of its full-year planned maintenance during that period. Adjusted earnings per share (EPS) of $1.65 and adjusted EBITDA of $2.8 billion allowed Marathon to announce a $5 billion share repurchase authorization, even as the company continues to build capacity at multiple sites. Marathon also pays a solid dividend yield of nearly 1.3%.

Like Valero, Marathon remains popular among analysts even after its protracted rally, with 11 of 18 calling MPC stock a Buy.

Phillips 66: Diversification Offers Benefits and Drawbacks

Phillips 66 (NYSE: PSX) has both refining and midstream transportation operations, giving it built-in diversification similar to Marathon's.

At the same time, the company's diversification may have slowed its share-price growth somewhat this year. Its lower-margin chemicals business, operated through CPChem, may have struggled even as the firm's oil business has been positioned to thrive.

As a result, PSX stock is up nearly 60% YTD, somewhat behind the other companies on this list but still far ahead of the broader market. Like other firms in the space, Phillips' performance has been characterized by robust refinery margins and utilization, EBITDA growth and other strong results. However, sizable mark-to-market losses in Q1 2026 caused an earnings miss, so caution may be warranted.

Still, Phillips offers the standout dividend yield among these three firms at about 2.46% and, like the other companies, remains a favorite of analysts, with 13 Buy ratings versus nine Hold ratings.