Can Tight Global Fuel Supply Sustain Valero's Export Opportunity?

Valero Energy Corporation VLO expects refining conditions to remain favorable, supported by low global fuel inventories, tight refining capacity and steady transportation-fuel demand. Management noted that roughly 5 million barrels per day (MMBbl/d) of global refining capacity was offline, while light-product inventories were about 130 million barrels below normal seasonal levels. Even if current conflicts ended immediately, consultant data cited by Valero suggested that global inventories could remain below the five-year average through 2027, supporting continued demand for refined-product exports.

Valero is well-positioned to benefit from this tight supply environment because it operates 14 refineries with roughly 3 MMBbl/d of combined throughput capacity and sells products across several international markets. Management highlighted strong gasoline export demand from Latin America, while reduced gasoline flows from Europe into the United States have further tightened the market. Valero has an open arbitrage opportunity to export jet fuel to Europe, giving the company another avenue to capitalize on regional fuel shortages.

These export opportunities are already supporting Valero’s refining economics, with management stating that strong export markets and export premiums helped improve Gulf Coast capture rates in second quarter of 2026. Valero’s refining margin reached $6.34 billion in second-quarter 2026, compared with $3.28 billion a year earlier, reflecting the strength of the current refining environment. Therefore, if global product inventories remain tight and refining capacity stays constrained, Valero’s large refining system and access to export markets are well-positioned to capture attractive international fuel demand.

How MPC & PSX Are Responding to Tight Fuel Supply

Marathon Petroleum Corporation MPC and Phillips 66 PSX are two other major refiners navigating tight global fuel supplies and positioning their operations to capture opportunities arising from constrained product markets.

Marathon Petroleum noted in its latest earnings call that global gasoline and diesel supplies remain constrained, with refinery outages in Russia and the Middle East adding further pressure to already low inventories. To respond to these conditions, MPC is focusing production on products where demand is strongest. The company reported record distillate exports in the second quarter of 2026, supported by attractive export opportunities in Latin America and Europe. Marathon Petroleum is expanding its refining capabilities through a 90,000-barrel-per-day (Bbl/d) distillate hydrotreater at Galveston Bay and a Garyville project designed to add 10,000 Bbl/d of export-premium gasoline output by the end of 2027.

Phillips 66 highlighted increasingly tight global refining fundamentals, driven by low fuel inventories and significant refinery disruptions across Asia, the Middle East and Russia. To capitalize on these conditions, the company maintained 96% refinery utilization in second quarter of 2026 while leveraging its commercial and logistics network to move feedstocks and refined products toward higher-value markets. Its expanded marine fleet and logistics flexibility further strengthen its ability to respond to regional shortages and capture attractive margins.

VLO’s Price Performance, Valuation & Estimates

Valero shares have risen 143% over the past year compared with the industry’s 84.5% growth.

Image Source: Zacks Investment Research

From a valuation standpoint, VLO trades at a trailing 12-month enterprise-value-to-EBITDA (EV/EBITDA) of 7.1X. This is above the broader industry average of 5.66X.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for VLO's 2026 earnings has remained constant over the past seven days.

Image Source: Zacks Investment Research

VLO currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research