NEW YORK — Valero Energy on Thursday reported its highest-ever second-quarter profit and beat Wall Street analyst expectations, as oil market disruptions in the Middle East sent its refining margins soaring.
Shares of San Antonio, Texas-based Valero climbed more than 2 per cent in midday trading.
The biggest tailwind in the second quarter was around feedstock, said Chief Commercial Officer Gary Simmons during a call with investors on Thursday. “The market structure thus far is resulting in an improvement in delivered crude costs relative to the benchmarks.”
U.S. refiners have been big financial beneficiaries of the Iran war as international buyers have clamored for their supplies amid disrupted shipping through the Strait of Hormuz, pushing the country’s fuel exports to record highs. In the second quarter, gasoline and diesel prices soared while feedstock prices lagged behind, pushing product margins to multi-year highs.
The refiner posted second-quarter profit of $12.54 per share, highest second-quarter profit on record, data compiled by LSEG showed. This far surpassed analysts’ expectations of $10.12 per share.
Refining segment performance was primarily driven by higher throughput, while strong capture and lower operating expense also contributed, Jefferies analysts noted.
Second-quarter adjusted operating earnings in Valero’s refining segment more than tripled to $4.4 billion from a year earlier, while refining margin per barrel of throughput nearly doubled to $23.62.
Valero’s average throughput volumes rose to 3.0 million barrels per day (bpd) in the quarter, compared with 2.9 million bpd a year earlier.
U.S. oil refiners are also finally reaping profits from renewable fuels, which have squeezed margins for years but are now witnessing surging demand following recent government biofuel mandates and higher diesel prices driven by the Middle East conflict.
Valero’s second-quarter operating income jumped to $717 million in the renewable diesel segment, compared with a loss of $79 million last year.
The company’s net income for the quarter came in at $3.7 billion — its strongest quarterly profit since 2022, when Russia’s invasion of Ukraine disrupted global energy supply chains and drove a surge in commodity prices that boosted refinery earnings.
Valero returned $2.6 billion to shareholders in the second quarter, up sharply from $695 million in the same period a year earlier.
Meanwhile, Valero said it is progressing with a $230 million FCC Unit optimization project at its St. Charles Refinery, which is expected to be completed in the third quarter and enhance the facility’s ability to produce high-value products.
(Reporting by Nicole Jao in New York and Pooja Menon in Bengaluru; Editing by Jonathan Ananda and David Gregorio)
