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Refining Stocks Rally as US-Iran Conflict Drives Fuel Cracks Higher, TPH Energy Says

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Renewed US-Iran tensions pushed refining stocks up 13.1% last week as diesel and gasoline crack spreads climbed to fresh five-year highs, TPH Energy said in a Monday note.

Refining shares outperformed the S&P 500's 1.6% decline after the US resumed its blockade and struck an Iranian supertanker, TPH Energy said. PBF Energy (PBF) gained 18.0%, while Phillips 66 (PSX) rose 9.8%.

US diesel crack spreads jumped $12 to $65 per barrel, far above the five-year average of about $23/bbl, while gasoline cracks added $2 to $41/bbl, exceeding the $18/bbl five-year average, the note said.

The West Coast posted the greatest improvement among US refining regions, while the Midwest lagged. Meanwhile, the 2026 6-3-2-1 refining futures curve advanced $3 to $21/bbl, its highest level this year, according to the note.

Outside the US, diesel crack spreads climbed $12/bbl in Northwest Europe and $15/bbl in Singapore, extending both markets to fresh five-year highs, the report said.

Among other developments, the note said Argus expects Group II base oil margins to improve in July as feedstock costs ease, while Iran said 200 ships have requested Strait of Hormuz permits since June.

BP (BP) lifted its second-quarter refining margin to $29.60/bbl from $16.90 in the prior quarter, while US retail diesel prices topped $5 per gallon and the strategic petroleum reserve fell to its lowest level since 1983, according to the note.

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