In this article, we are going to discuss the 12 best oil refinery stocks to invest in according to analysts.
The United States of America is the Largest Oil Producing Country in the World with current production reaching record levels, so it doesn’t come as a surprise that it is also counted among the Countries with the Largest Refining Capacities. The US had 132 oil refineries with a total capacity of 18.4 million barrels per day (bpd) at the start of 2024, a 2% increase compared with the start of 2023.
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2024 was a difficult year for the global refining sector as industry players faced a drop in profitability to multi-year lows amid soft consumer and industrial demand (especially in China), slowing economic growth, increasing energy transition, and expanding global refining capacity. The declining fuel margins in the Q4 2024 led to disappointing earnings results for many oil refiners, as a flood of new output competed with stagnating demand. This has led to several oil majors shutting down operations and putting their refineries up for sale, but that is also not going as smoothly as expected.
Things don’t seem to be getting any better either as according to the International Energy Agency’s recent market outlook, growth in the global demand for oil is expected to slow down in the coming years as energy transitions advance, putting downward pressure on prices. The US Energy Information Administration stated last month that it expects Brent crude oil prices to fall 8% to average $74 a barrel in 2025, then fall further to $66 a barrel in 2026, further reducing margins for refiners.
Moreover, despite his repeated calls to ramp up oil production in the country, President Donald Trump’s tariffs on imports from Mexico and Canada could make things worse for the refining sector. Many refineries in the Midwest depend on Canadian crude and the upcoming 10% tariff will force them to pay either more for their feedstock, or slash production, further squeezing an industry already in decline. The President wants to make America self-sufficient and independent when it comes to energy, but no matter how much oil the United States pumps, its refineries were designed to process the darker, denser, cheaper crude that is hard to find domestically. However, Trump’s plans to roll back support for electric vehicles and charging stations could slow their sales and bolster gasoline demand, offering some respite to the industry.
The rapid energy transition is also a major cause of concern for the refining sector as governments push drivers toward electric vehicles in pursuit of climate goals. So the only way forward is for the industry to adapt and evolve. Several forward-looking refiners are now boosting their resilience by upgrading their facilities to produce higher-value but lower-carbon products such as petrochemicals and renewable fuels, though it will require significant capital investment.
The energy sector has witnessed considerable fluctuations over the last few months, surging by over 6% in November before declining around 10% in December. However, the broader energy sector ended last year with a return of just 5.72%, significantly lagging behind gains of 25% by the wider market. Nevertheless, the sector’s performance over the past 3-year and 5-year periods remains strong.
With that said, here are the Best Oil Refinery Stocks According to Analysts.
An oil refinery at night, its chimneys creating a smoky silhouette against a starry sky.
Methodology:
To collect data for this article, we examined all the companies in the oil refining sector that are listed on NASDAQ and NYSE and then compiled a list of the stocks with the highest upside potential according to Wall Street analysts, as of February 18, 2024. Following are the Best Oil Refinery Stocks According to Analysts.
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12. BP p.l.c. (NYSE:BP)
Stock Upside Potential: 7.37%
BP p.l.c. (NYSE:BP) is a British multinational company recognized worldwide for quality gasoline, transport fuels, chemicals, and alternative sources of energy such as wind and biofuels. The company’s US refineries represent about 40% of its global refining capacity, producing the energy people need for everyday life.
BP p.l.c. (NYSE:BP) had a tough Q4 2024 as it struggled to maintain growth amidst fluctuating oil markets and strategic investments in renewables. The company reported an EPS of $0.44, falling short of the $0.46 forecast. BP’s revenue fell 12.3% YoY to $45.75 billion, missing analysts’ estimates by $1.2 billion. The oil major’s operating cash flow was also down 20.8% YoY to $7.43 billion. However, despite the struggles, the company continued its focus on returning value to its shareholders, growing its dividend per share by 10% and announcing $7 billion of share buybacks in 2024, including a $1.75 billion announced this month.
Earlier this month, BP p.l.c. (NYSE:BP) announced plans to sell its BP Gelsenkirchen refining site in Germany as part of its plans to cut costs by at least $2 billion. The facility has the capacity to process 240,000 barrels a day of crude and is Germany’s third-largest refinery.
Shares of BP p.l.c. (NYSE:BP) surged by over 7.4% on February 10, 2025, after Elliott Investment Management acquired a meaningful stake in the firm and is now pushing it to take radical action to transform its performance, including recruiting a new chairperson and pressuring the oil giant to divest its environmentally friendly assets.
11. Marathon Petroleum Corporation (NYSE:MPC)
Stock Upside Potential: 7.54%
Marathon Petroleum Corporation (NYSE:MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. Marathon operates the largest refining system in the US, with 3 million barrels per day of crude oil refining capacity across 13 refineries, which are integrated with each other via pipelines, terminals, and barges to maximize operating efficiency.
Marathon Petroleum Corporation (NYSE:MPC) witnessed a sharp decline in its earnings in Q4 2024, as its adjusted EPS fell almost 81% YoY to $0.77, but still beat market expectations by $0.02. The company’s refining profit was hit especially hard, slumping to $559 million, down 75% from $2.25 billion a year ago. However, Marathon’s midstream segment performed well, primarily due to higher rates and higher volumes of liquids transported through its system, and reported adjusted earnings of $1.71 billion in the quarter, up 8.7% from a year earlier. The company’s full-year net cash from operations for 2024 was $8.7 billion, enabling a peer-leading capital return of $10.2 billion and a 23% capital return yield for its shareholders.
Marathon Petroleum Corporation (NYSE:MPC) has outlined a capital spending plan of $1.25 billion for 2025, focusing on enhancing refining efficiency in its Los Angeles, Galveston Bay, and Robinson refineries. It also expects to spend around $2 billion this year on growth projects in its midstream business.
10. Valero Energy Corporation (NYSE:VLO)
Stock Upside Potential: 9.11%
Valero Energy Corporation (NYSE:VLO) is the world’s largest independent petroleum refiner and a leading producer of low-carbon transportation fuels. With a workforce of over 6,000, Valero has 15 refineries in the US, Canada, and the UK, with a total throughput capacity of approximately 3.2 million barrels per day.
Due to the ongoing challenges in the refining sector, Valero Energy Corporation (NYSE:VLO) saw its Q4 2024 revenue drop 13% YoY to $30.76 billion, but still beating the analysts’ estimates by over $733 million. The company’s adjusted EPS also fell by a massive 82.1% to $0.64 but remained above market expectations by $0.58. Valero’s refining segment reported $437 million of operating income for Q4 2024 compared to $1.6 billion for the same period in 2023. However, the company continued to honor its commitment to shareholder returns with a payout ratio of 78% for 2024, returning $601 million to its stockholders in Q4 and increasing its quarterly cash dividend by 6%, putting it among the 13 Best Natural Gas and Oil Dividend Stocks To Buy.
Valero Energy Corporation (NYSE:VLO) announced last month that it is progressing with an FCC Unit optimization project at its St. Charles Refinery that will enable it to increase the yield of high-value products including high-octane alkylate. The project is estimated to cost $230 million and is expected to start up in 2026.
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