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Refining Shares Gain as Diesel Cracks Surge, SRE Waivers Lift Outlook, TPH Says

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US refining stocks rose last week as a jump in diesel margins and favorable developments around small refinery exemptions boosted expectations for refiners' earnings, TPH Energy strategists said in a note on Tuesday.

Matthew Blair, TPH Energy analyst, said that refining equities gained 4.3% for the week, compared with a 0.1% rise in the S&P 500.

The Environmental Protection Agency's 2025 small refinery exemptions included waivers covering 1.76 billion renewable identification numbers, up from 1.15 billion a year earlier, boosting refiners that qualify for the exemptions.

TPH said that the EPA also said the RINs exempted in 2025 would be added back to refiners' renewable volume obligations in 2026 and 2027, a move that pushed RIN prices higher and increased the value of the exemptions.

The consultancy said that the development is supportive for refiners including Delek US Holdings (DK), CVR Energy (CVI), HF Sinclair (DINO) and Par Pacific Holdings (PARR).

Meanwhile, diesel markets provided another tailwind for the sector as renewed fighting between the US and Iran stoked supply disruption concerns, driving refining margins higher.

TPH said that the US diesel crack spread, a measure of the profitability of turning crude into diesel, rose $11 per barrel on the week to $87/bbl, while the Northwest European diesel crack gained $9 to $87/bbl. Singapore's diesel crack increased $3/bbl.

The US 3-2-1 crack spread, a widely watched measure of refinery profitability, rose $1 to $53/bbl.

Gasoline margins moved in the opposite direction, with the US gasoline crack falling $4/bbl to $35.

The Brent-WTI crude spread narrowed by $1 to $5/bbl, while the Brent-WCS differential at Hardisty, Alberta, remained unchanged at $25/bbl.

TPH said that the combination of higher diesel margins and stronger SRE economics has provided a fresh boost to refiners as markets assess the impact of renewed geopolitical tensions on crude and refined-product supplies.

Price: $75.22, Change: $+3.36, Percent Change: +4.67%

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