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

Key Points

• Renewed intensification of the Iran war has pushed crack spreads to record highs, boosting U.S. refiners that now serve demand once met by the Persian Gulf.
• Valero, Marathon Petroleum, and Phillips 66 have all reached all-time highs in recent weeks.
• All three refiners maintain strong analyst support and dividend payouts, with Phillips 66 offering the highest yield.

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.

The result is that 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.

The continued war in Iran has already benefited some U.S. refiners, who are the new recipients of global demand that was once reserved for the Persian Gulf. At least until the war resolves—and potentially afterward as well—domestic companies in this space are well-positioned to continue to generate strong cash flow and return value to investors via 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 spreads environment.

The company has excellent positioning in its Gulf Coast operations that should allow it to capitalize on bottlenecks in oil refining, keeping margins elevated for 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 this report already in a strong position. In the first quarter of the year, $1.3 billion in net income attributable to shareholders and $1.8 billion in refining operating income were both a sharp reversal of less-than-impressive results in the prior-year period.

Investors may expect the company to continue its aggressive buybacks and dividend payouts so 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 multi-year 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 out of 21 analysts calling VLO a Buy.

Marathon: Midstream Bonus Gives an Extra Advantage

With more impressive returns even than VLO, 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 a similar way to Valero.

Setting Marathon apart, however, is the master limited partnership MPLX LP NYSE: MPLX, which the former company 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 and benefiting from a different set of bottlenecks in the midstream space.

Even not factoring MPLX, Marathon has been performing very well: the firm ran refineries at 89% utilization in Q1 2026, completing about 40% of full-year planned maintenance during that period. Noteworthy adjusted earnings per share (EPS) of $1.65 and adjusted EBITDA of $2.8 billion have 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 out of 18 calling MPC stock a Buy.

Phillips 66: Diversification Benefits and Drawbacks

Phillips 66 NYSE: PSX has both refining and midstream transportation operations in its scope, giving it built-in diversification with a similar outcome to Marathon above.

At the same time, the company's diversification may have slowed down its share price growth a bit this year—its lower-margin chemicals business through CPChem may have suffered a bit even as the firm's oil business is positioned to thrive.

The result is that 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 points. 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 of these three firms at about 2.46% and, like the other companies, remains a favorite of analysts with 13 Buys versus nine Hold ratings.