Valero's Q2 2026 profit rose to $3.72 billion ($12.62 a share) from $714 million as diesel crack spreads nearly tripled and refining margin per barrel almost doubled to $23.62, with renewable diesel and ethanol swinging to solid profits.
Revenue
$44.5B
+48.8% YoY
Net income
$3.7B
+421.0% YoY
Diluted EPS
$12.62
+453.5% YoY
Operating margin
11.7%
How VLO compares with Energy peers
Figure
VLO
Peer median
Rank
Revenue growth (YoY)
+48.8%
+39.5%
9th of 20
Operating margin
11.7%
22.1%
17th of 18
EPS growth (YoY)
+453.5%
+47.5%
2nd of 20
Rank 1 = fastest revenue growth, highest operating margin, fastest EPS growth. Peers are the other Energy companies with a 2026 report on this site, each at its latest period we've analyzed; fiscal calendars differ, so periods are not always the same months.
Diesel margins nearly tripled, and Valero's profit rose five-fold
Valero earned $3.72 billion attributable to shareholders in the second quarter of 2026, or $12.62 per diluted share, up from $714 million ($2.28) a year earlier. Almost all of the jump came from one place: the gap between what Valero pays for crude oil and what it gets for the diesel and gasoline it makes from it. According to the 10-Q, Middle East conflict and outages at refineries and export terminals in the Middle East and Russia left "constrained worldwide supply" of fuel, which pushed product prices up faster than crude. Valero ran its refineries at about the same rate as a year ago, but earned almost twice as much on every barrel.
At a glance
$23.62 refining margin per barrel vs $12.35 a year ago. Each barrel Valero processed brought in almost twice as much gross profit. This is what drove the quarter.
$2.9 billion of extra profit from diesel alone. Management puts the gain from wider distillate (mainly diesel) margins at about $2.9 billion, three times the ~$980 million from gasoline. A $0.78 billion drag from pricier sweet crude offset part of it.
$2.6 billion returned to shareholders. Buybacks retired 9.0 million shares in the quarter, and the board added a new $5.0 billion repurchase authorization in July, on top of $1.4 billion still unused.
The numbers
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$44,476M
$29,889M
+48.8%
Operating income
$5,196M
$997M
Read 0 community reports on Valero Energy, or write your own.Write a report
Operating margin here is operating income divided by revenue: the share of sales left after running the business, before interest and tax. For a refiner that share is small because revenue includes the full cost of the crude it buys, so the margin per barrel tells you more.
How a refiner makes money, and why this quarter was unusual
A refinery buys crude oil and sells the fuels it makes. The difference between the two, before running costs, is the refining margin. The market benchmark for it is the crack spread, the price of a product minus the price of crude. Valero's own reference table shows how much those spreads widened:
Market benchmark ($/barrel)
Q2 2026
Q2 2025
Brent crude price
$97.06
$66.59
U.S. Gulf Coast diesel less Brent
$43.52
$14.79
U.S. Gulf Coast gasoline (CBOB) less Brent
$17.98
$8.99
North Atlantic diesel less Brent
$47.50
$18.79
Brent less Western Canadian Select (heavy crude discount)
$13.92
$6.25
Crude rose by about $30 a barrel, but the Gulf Coast diesel spread rose by almost the same amount again on top of that, because fuel was scarcer than crude. That's why revenue rose $14.6 billion while cost of sales rose only $10.4 billion.
The filing names three moves behind the $3.1 billion increase in Refining margin:
Distillate (mainly diesel) margins: about +$2.9 billion
Gasoline margins: about +$980 million
Weaker "sweet crude oil differentials": about -$780 million. Sweet (low-sulfur) crude is Valero's largest feedstock at 1.6 million barrels a day. The Brent vs Dated Brent spread moved to -$8.05 from -$1.08, a sign that physical light crude cost more than the futures price. In practice the premium crude Valero buys got more expensive compared with the benchmark its products are priced against.
The heavy-crude discount widened sharply (Western Canadian Select traded $13.92 below Brent, against $6.25 a year earlier). That helps refiners built to run heavy crude, but Valero actually processed less heavy sour crude than a year ago (514,000 vs 554,000 barrels a day), so it captured less of this than it could have.
By region: every U.S. and European region roughly doubled
Region
Throughput Q2 26 (kbpd)
Q2 25
Margin/bbl Q2 26
Q2 25
U.S. Gulf Coast
1,829
1,841
$24.42
$11.78
U.S. Mid-Continent
485
423
$20.46
$10.52
North Atlantic (Wales, Quebec)
506
396
$22.02
$13.20
U.S. West Coast
130
262
$30.36
$18.02
Two operational events show up in these volumes:
Port Arthur fire. A fire in a diesel hydrotreater on March 23, 2026 shut the whole Port Arthur, Texas refinery. It restarted in April at reduced rates and was back to normal during the quarter, but Gulf Coast volume was still slightly below last year. The quarter includes $15 million of repair costs, against which Valero booked a $78 million insurance receivable. No cash from insurers had arrived by June 30.
Benicia closure. Valero finished idling its Benicia, California refinery at the end of April, so West Coast throughput halved to 130,000 barrels a day. Total throughput still rose, because the Mid-Continent and North Atlantic plants ran harder (the North Atlantic was up 110,000 barrels a day).
The other two businesses swung from loss to profit
Renewable Diesel (Diamond Green Diesel, a 50/50 joint venture with Darling Ingredients that Valero consolidates in full) earned $717 million of operating income, against a $79 million loss a year earlier. Sales volume rose 40% to 3.8 million gallons a day, and margin per gallon went from $0.22 to $2.52. The filing credits about $1.0 billion from higher renewable diesel prices, offset by about $200 million of higher feedstock costs (used cooking oil rose to $0.82/lb from $0.56). Half of this profit belongs to the partner, which is why "net income attributable to noncontrolling interests" rose by $404 million to $353 million. Valero's shareholders see only about half of the $717 million.
Ethanol earned $318 million, up from $54 million. Margin per gallon rose to $1.15 from $0.52. The filing breaks it down as $99 million from clean fuel production credits (a tax credit newly available to ethanol from January 2026 under the One Big Beautiful Bill Act), about $90 million from higher ethanol prices, about $50 million from higher co-product prices and about $30 million from cheaper corn.
Takeaway: This quarter's profit came from the market, not from anything Valero changed. Throughput rose only 1% and costs per barrel fell only slightly, but the refining margin per barrel nearly doubled because conflict-driven outages cut global fuel supply. That makes earnings of this size depend on those outages lasting. What Valero controls is what it does with the cash: $2.6 billion returned in one quarter, and net debt at 11% of capital.
What the headline numbers hide
Cash conversion was strong, helped by working capital. Operating cash flow was $5.58 billion against net income (including the partner's share) of $4.07 billion. Of that, $706 million came from working-capital swings, which reverse over time (over the first half, receivables and payables both grew with higher product and crude prices), and $389 million was the DGD partner's share. Valero's own "adjusted" operating cash flow, excluding both, was $4.49 billion. That is still above the $3.72 billion of attributable earnings, so the profit is backed by cash.
GAAP and adjusted earnings are almost the same. Adjusted EPS ($12.54) is 8 cents below reported EPS. The only adjustments were a $44 million pre-tax LIFO inventory gain (Valero drew down West Coast inventory as Benicia closed, releasing older, cheaper cost layers) and $15 million of Port Arthur fire costs. There are no big non-cash items hiding in this quarter.
The year-ago comparison has no distortions, but the half-year one does. First-half 2025 carried a $1.1 billion impairment on the Benicia and Wilmington refineries. That's why six-month EPS reads $16.78 vs $0.37. On an adjusted basis the first half was $16.71 vs $3.17.
Part of the ethanol profit was catch-up. The $99 million of clean fuel production credits includes an amount for first-quarter sales, booked in Q2 after updated emissions modeling methodologies were released. Q3 ethanol profit will not repeat that catch-up.
Buybacks explain only a small part of the EPS jump. The diluted share count fell 5.8% to 294 million. At last year's share count, this quarter's profit would still have been about $11.92 a share. About $0.70 of the $10.34 increase came from the smaller share count, and the rest from operations. The effective tax rate was 21%, compared with about 30% a year earlier, but last year's pre-tax base was so small ($942 million) that the rate isn't a useful comparison.
Depreciation is falling for a known reason. Benicia depreciation dropped to about $33 million from about $100 million, as the refinery's value has now been written down to salvage. That is why refining D&A per barrel fell to $2.36 from $2.66. It's a lasting benefit, but it doesn't reflect better operations.
Sequentially, Q2 was a big step up on Q1. Subtracting Q2 from the first half gives about $1.26 billion of Q1 net income and a Q1 refining margin of roughly $14.90 a barrel (our calculation from the half-year and Q2 tables). Most of 2026's earnings so far came in a single quarter.
Outlook
Valero gives no numeric earnings guidance. The 10-Q's outlook for the third quarter says:
Fuel demand has been "resilient" but "demand growth has moderated" because of disruption from the Middle East conflict.
Global refining capacity is expected to stay disrupted by outages in the Middle East and Russia, so "global refined product inventories are expected to remain low", which supports margins.
Crude differentials are expected to "remain volatile". Alternative routes around the Strait of Hormuz, strategic reserve releases and more production elsewhere could ease this.
Renewable diesel demand is expected to stay strong because the EPA raised its blending requirements for 2026 and 2027, especially for biomass-based diesel.
Other items management flagged:
The $230 million St. Charles FCC optimization project, which lets that refinery make more high-value products, is still due to start up in Q3 2026.
The quarterly dividend was raised to $1.20, from $1.13 a year ago.
There is $6.4 billion of total buyback capacity ($1.4 billion left plus the new $5.0 billion).
Cash was $7.9 billion against $9.1 billion of debt.
Our view: In Q3, Port Arthur runs at normal rates for the full quarter and St. Charles adds capacity, so volume should be at least as high as in Q2 even without Benicia. Margins are the unknown. Management's own list of what could ease the squeeze (rerouted crude flows, reserve releases, more supply) is also a list of what would bring the $43 diesel crack back toward last year's $15. What to watch in the Q3 release:
the Gulf Coast diesel crack and Valero's margin per barrel against this quarter's $23.62
whether sweet-crude costs keep eating into margins, as the $780 million drag did this quarter
the pace of buybacks under the new authorization, which shows how durable management thinks these margins are.
Figures are from Valero's second-quarter 2026 Form 10-Q and the accompanying earnings release (July 30, 2026). The full 10-Q is linked as the source filing.