Top US refiners see profits soar, step up investor rewards

• TD Cowen estimates Marathon and Valero will each repurchase approximately 20% of their market value (roughly $91 billion and $90 billion respectively) between Q3 2026 and end of 2027, while Phillips 66 will repurchase about 10% of its $81 billion market cap
• Refining profitability metrics hit records: ultra-low sulfur diesel crack spreads reached $93.84 per barrel on August 10, and gasoline crack spreads hit $60 per barrel in July, the highest since April 2020
• U.S. gasoline prices exceeded $4 per gallon in late March for the first time in over three years due to supply disruptions from the Iran conflict and refinery attacks, though executives remain cautiously optimistic about seasonal demand transitions

Summary: Top US Refiners Report Record Profits and Shareholder Returns

The three largest U.S. independent oil refiners—Marathon Petroleum, Phillips 66, and Valero Energy—posted combined second-quarter profits of $12.6 billion, the highest since Russia's 2022 invasion of Ukraine. This represents a substantial increase from $2.9 billion in profits during the same quarter last year.

Capital Returns: The refiners returned $6.3 billion to shareholders in Q2 through dividends and buybacks, compared to $2.6 billion in the year-ago period. TD Cowen analysts project Marathon and Valero will each repurchase approximately 20% of their market value between Q3 and end of next year. Marathon's market cap stands at $91.3 billion, while Valero is valued at $90.1 billion. Phillips 66, valued at $81.2 billion, is expected to repurchase roughly 10% of its market value while focusing on growth investments and debt reduction.

Market Drivers: The surge in profitability stems from disrupted global energy shipping due to the Iran war and attacks on oil refineries, which tightened supplies and elevated prices. The ultra-low sulfur diesel crack spread hit a record $93.84 per barrel on August 10, while gasoline crack spreads reached $60 per barrel on July 17—the highest since April 2020. U.S. pump prices exceeded $4 per gallon in late March for the first time in three years.

Outlook: Executives remain cautiously optimistic for the second half of 2026, though product margins have eased from Q2 peaks. The S&P refining index has gained 36% year-to-date, reflecting strong sector performance. Analysts expect robust buyback programs to continue into Q3, sustaining investor rewards.