$VLO $MPC $PSX $DINO $XOM $CVX Company-by-Company Management Commentary on Refining Margins From the Most Recent Earnings Call Synthesis: Margin Outlook The unanimous read across all six management teams is that the US refining margin environment remains well above mid-cycle through at least 3Q26 and into 2027, driven by geopolitically-induced supply disruption rather than a cyclical demand surge. The key risk to this view is a faster-than-expected return of Middle Eastern and Russian refining capacity, which all managements acknowledge but none are currently pricing into their base cases. The secondary risk is a concentrated turnaround wave in 2027 if deferred maintenance is pulled forward simultaneously across the industry. For now, the setup — tight inventories, constrained global supply, record US utilization, and structurally limited new clean-product capacity — is as constructive as the sector has seen in years. Valero Energy (VLO) Valero processed more crude while operating fewer refineries, lifting system utilization to ~98% in 2Q26, with the Gulf Coast and North Atlantic regions setting all-time throughput highs. (1) The USGC ULSD crack spread nearly tripled year-over-year to $43.52/bbl. Management expects refining margin capture to improve further in 3Q as crude premiums ease and market backwardation flattens, with the refining indicator up 31% in 3Q. (2) Management is structurally bullish on future mid-cycle margins relative to historical calculations, citing hydroskimming margins in Northwest Europe as the price-setter for product crack spreads, rising carbon credit costs, inflationary OpEx/CapEx pressures, and a favorable outlook on crude quality discounts — particularly for heavy sour crude. (3) Management stated a clear incentive to run significantly more heavy crude than in recent quarters, with heavy crude throughput capacity substantially expanded since the Port Arthur coker startup in 2023. (4) Quarterly capex guidance of $612mn is 77% above 2Q levels as Valero works to fully restart Port Arthur by year-end. (5) Marathon Petroleum (MPC) MPC ran at 94% system-wide utilization on ~3mn bpd throughput in 2Q26, with the Gulf Coast specifically at 100% utilization delivering $27 adjusted EBITDA/bbl. 3Q26 guidance calls for 3,005 mb/d total throughput, with Gulf Coast at 99%, Mid-Con at 87%, and West Coast at 96%. (6) R&M margin more than doubled to $36.3/bbl versus $17.6/bbl in 2Q25, with the blended US 3-2-1 crack spread also more than doubling year-over-year to $33.54/bbl. Record EPS of $17.73 beat the Street estimate of $13.73. (7) MPC management characterized the refining macro as constructive, citing >9mn bpd of planned and unplanned global capacity downtime — approximately 4mn bpd above historical norms — driven by Persian Gulf disruptions and Ukrainian attacks on Russian infrastructure. Management expects an enhanced mid-cycle environment through end of 2026 and into 2027, with US gasoline inventory well below the 5-year range and distillate at the bottom of its 5-year range. (8) MPC's Chief Commercial Officer noted: "We're all in max diesel mode," adding that "when you're in max mode of any one product for a significant period of time, it puts pressure on other products" — with impacts beginning to appear in the gasoline crack spread. (9) Product margins are expected to moderate in 3Q26 as outages normalize, though MPC expects them to remain well above mid-cycle levels, with WTI-linked cracks up >20% in 3Q and throughput guidance up ~2% sequentially. (10) Phillips 66 (PSX) PSX achieved ~96% refining utilization in 2Q26, above the industry average and consensus of ~94%, with an 86% clean product yield and a 98% capture rate. The company is guiding for mid-90% utilization going forward. (11) Realized refining margins reached $24.08/bbl in 2Q26, more than double the $11.25/bbl a year earlier. Central Corridor gross margin was $29.56/bbl and Gulf Coast was $24.25/bbl, with refining segment operating income of $3,086mn. (12) PSX management is bullish on refining cracks through Q3 and into 2027, citing ~8.4mn bpd of offline global refining capacity, low global product inventories, Chinese exports running ~50% below recent-year levels, and structurally widening WCS differentials from increasing Canadian and Venezuelan heavy crude supply. (13) PSX EVP of Marketing & Commercial stated on the earnings call that supply disruptions from the Iran war look set to weigh on markets for gasoline and diesel through 2027. (14) Of the projected 1.1mn bpd of new global refining capacity in 2026, PSX management noted only 350–400k bpd will be for clean products, as many new international facilities are petrochemical-focused. (15) PSX flagged that refiners are deferring some maintenance and repairs to capitalize on current high margins, which could lead to a more concentrated turnaround cycle and increased unplanned outage risk in the future. (16) HF Sinclair (DINO) DINO ran 639.7 MBPD at 94.3% utilization in 2Q26. Management guided 3Q26 crude runs of 590–620 MBPD, reflecting planned maintenance at El Dorado. (17) Adjusted refinery gross margin rose 57% year-over-year to $25.95/bbl, with the West region earning $30.57/bbl — well above mid-cycle and supporting substantial quarterly free cash flow. (18) DINO management expects global refining capacity outages to keep markets tight into 2027, supporting near-term margins, while acknowledging crack spreads will moderate as capacity returns. (19) Small-refinery exemption decisions expected in August could result in the return of up to $415mn in RINs for DINO, providing additional earnings upside. (20) Chevron (CVX) Chevron achieved record US refinery throughput of over 1mn bpd at 97% utilization in 2Q26. (21) Adjusted downstream earnings increased 449% year-over-year, with downstream profit of $4.87bn versus $737mn in 2Q25. Refining margins were a $1,140mn tailwind for the US downstream segment. (22) Chevron management stated on the 2Q26 call that products are tighter than crude globally, leading to widened cracks, with upward pressure on product pricing expected into 3Q and potentially beyond. Management noted demand destruction is not obvious at any significant scale. (23) 3Q26 downstream earnings will face a $175–225mn headwind from planned turnaround activity at El Segundo and Richmond refineries. (24) Chevron's California market position is strengthening structurally: its two California plants account for 49% of US capacity, and market share in the state is expected to increase following the closure of PSX's Los Angeles refinery in late 2025 and Valero's Benicia refinery in April 2026. (25) ExxonMobil (XOM) ExxonMobil reported 2Q26 adjusted EPS of $3.52/share, a slight miss versus consensus, partly due to refinery maintenance that prevented full capture of elevated gasoline, diesel, and jet fuel prices. Overall profit was $14.7bn. (26) Approximately 35% of ExxonMobil's global downstream capacity is located along the US Gulf Coast, giving it significant leverage to the current margin environment. Mid-cycle EBIT for XOM's refining assets is projected at $3.01bn, the highest among the group. (27) Key Readthroughs: Direction of U.S. Refining Margins 1. Structural Supply Disruption Is the Dominant Driver — and It's Durable The Iran war and Ukrainian strikes on Russian refining infrastructure have collectively removed a significant portion of global fuel-making capacity, leaving US refiners as the world's primary fuel supplier. (28) Global planned and unplanned refinery downtime exceeds 9mn bpd — approximately 4mn bpd above historical norms — with no near-term resolution in sight. (29) RIN-adjusted crack spreads for 3Q26 are well above mid-cycle across all US regions: North Atlantic $48.14/bbl, Gulf Coast $42.38/bbl, Mid-Con $40.21/bbl, and West Coast $46.01/bbl. (30) 2. Inventory Tightness Provides a Floor US commercial crude stockpiles have fallen to their lowest level since 2018, with Cushing inventories at their lowest since August 2014. (31) US diesel inventory is 11.6% below the 5-year average and gasoline is 6.9% below — both providing a structural floor under product crack spreads. (32) 3. New Capacity Additions Are Not a Near-Term Threat Of the ~1.1mn bpd of new global refining capacity expected in 2026, only 350–400k bpd is for clean transportation fuels; the remainder is petrochemical-focused. (33) Management across all companies (VLO, MPC, PSX, DINO) consistently flagged that new capacity additions are ramping slowly with low reliability, and that refinery rationalizations in the US (PSX LA, VLO Benicia) are removing supply from the tightest regional markets. (34) 4. "Max Diesel Mode" Is Creating Cross-Product Pressure With refiners optimizing for distillate to capture the widest cracks, gasoline crack spreads are beginning to feel secondary pressure. (35) This dynamic is worth monitoring: if gasoline cracks compress meaningfully while distillate remains elevated, capture rates for refiners with less flexible configurations could disappoint relative to headline crack spread levels. 5. Deferred Maintenance Is a Latent Risk PSX explicitly flagged that the industry is deferring maintenance to maximize margin capture, which could result in a more concentrated turnaround cycle and elevated unplanned outage risk in 2027. (36) This is a double-edged dynamic: near-term it supports utilization and margins, but it raises the probability of a more disruptive maintenance wave once the current margin environment normalizes. 6. Heavy Crude Differentials Are a Structural Tailwind Widening WCS differentials (now >$15/bbl) and incremental Venezuelan barrels flowing to the USGC are providing a feedstock cost advantage for complex refiners — particularly VLO, MPC, PSX, and DINO. (37) Valero's management sees an incentive to run significantly more heavy crude, with Port Arthur's coker restart expanding capacity to do so. (38)