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Supply Disruptions Lift Refiner Q2 EPS Outlook Above Consensus, TPH Energy Says

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TPH raised its average second-quarter 2026 earnings estimate for refiners to $6.38 per share from $5.67, exceeding the $5.40 consensus forecast and sharply above Q1 earnings of $0.59 per share, the firm said Thursday.

TPH said supply disruptions tied to the US-Iran conflict continue to support refining fundamentals and improve earnings expectations across the sector.

The International Energy Agency expects global refinery runs to fall to 78.7 million barrels per day in the second quarter from 83.6 million b/d in Q1 and 82.9 million b/d a year earlier, TPH said.

TPH said shipping disruptions in the Strait of Hormuz and refinery damage linked to the conflict are reducing global fuel supplies.

US gasoline cracks increased by about $20 per barrel over the quarter to $25/bbl, compared with a five-year average of $20/bbl, the firm said.

US diesel cracks climbed by roughly $21/bbl to $48/bbl, more than double the five-year average of $22/bbl, TPH said.

The West Coast, Southwest and Rocky Mountain regions posted the strongest margin gains relative to historical averages, while the Mid-Continent and Midwest regions lagged, according to the firm.

US refiners increased operating rates to address supply shortages, pushing utilization to 91% in the second quarter from a five-year average of 89%, TPH said.

Higher operating rates helped gasoline exports reach 880,000 b/d and distillate exports rise to 1.56 million b/d, above five-year averages of 828,000 b/d and 1.19 million b/d, respectively, the firm said.

TPH said tighter availability of Middle Eastern medium-sour crude has narrowed crude differentials, although Western Canadian Select prices at Hardisty and Houston remain under pressure from constrained Canadian pipeline capacity.

The firm added that stronger backwardation is creating a $ 5/bbl-over-the-quarter headwind for inland US crude barrels, while elevated tanker costs are weighing on coastal markets.

TPH expects lower crude prices, wider West Coast jet fuel premiums, reduced downtime and a $4/bbl increase in octane spreads to support second-quarter capture rates.

However, the firm said rising Renewable Volume Obligation costs approaching $4/bbl, tighter crude differentials, weaker butane blending demand and the $5/bbl WTI structure impact remain key challenges.

TPH forecast group capture rates of 73% in the second quarter, compared with 72% in the first quarter.

The firm said renewable diesel indicators improved by $1.39 per gallon, Midwest ethanol margins increased by $0.33/gal, polyethylene chain margins rose by $0.40 per pound and $0.32/lb, while UAN and ammonia fertilizer prices advanced 33% and 27%, respectively.

TPH said potential Small Refinery Exemption proceeds could equal 23% of market capitalization for Delek US Holdings (DK), 7% for Par Pacific Holdings (PARR), and 4% each for HF Sinclair (DINO) and CVR Energy (CVI), assuming partial waivers for all applications.

TPH said its second-quarter earnings forecasts exceed consensus estimates for Par Pacific Holdings, HF Sinclair, Phillips 66 (PSX) and Valero Energy (VLO), while its estimate for CVR Energy remains below consensus.

Price: $47.19, Change: $+0.01, Percent Change: +0.02%

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