Valero Energy: Abundant tailwinds, exceptional margins

Research evidence excerpt

Valero Energy: Abundant tailwinds, exceptional margins

Equity Research

North America Midstream and Refining

30 June 2026

Valero Energy

Abundant tailwinds, exceptional

margins

Even as flows through the Strait begin to normalize, the U.S. VLO OVERWEIGHT

refining backdrop remains supported by global outages and Unchanged

North America Midstream

lean product inventories. That said, the key question is and Refining NEUTRAL

Unchanged

whether crack spreads can sustain recent strength and Price Target USD 279.00

raised 7% from USD 261.00preserve refiners’ economic rents following crude's sharp

pullback. Price (30-Jun-26) USD 260.44

Potential Upside/Downside +7.1%

Source: Bloomberg, Barclays Research

• Supply set up likely to remain favorable through summer even if current interim peace

deal holds and activity through the Strait normalizes permanently. There remains Market Cap (USD mn) 77333

significant Middle East refining capacity damaged and/or offline without a clear timeline for Shares Outstanding (mn) 296.93

when this will return to full run-rate production. Compounding this supply dynamic is Free Float (%) 99.59

continued Ukrainian attacks on Russian refining infrastructure. In this already constrained 52 Wk Avg Daily Volume (mn) 3.1

supply environment, it will take time for currently depleted inventories to rebuild, particularly Dividend Yield (%) 1.84

given we are currently in peak gasoline demand season. Per EIA data, Gasoline and diesel Return on Equity TTM (%) 17.76

inventories currently stand 6% and 10% below their respective 5 year averages. Current BVPS (USD) 80.39

Source: Bloomberg

As the market transitions into shoulder season and winter, attention will likely turn to

whether distillate demand can withstand the weather-related uncertainties associated with a