Valero Energy Corporation had its best quarter in more than two years as turbulent global politics increased demand for U.S. oil and opened new supplies to American companies.
The San Antonio-based oil and energy company announced a net income of $1.3 billion, an increase of $4.22 per share, for the first quarter of 2026.
It’s Valero’s third straight quarter of more than $1 billion in net income and a stark contrast to a year ago, when Valero lost its stockholders $595 million in the first quarter of 2025.
Company leaders noted that conflict between the U.S. and Israel and Iran, which has led to the blockage of the Strait of Hormuz and bottled up access to oil supplies in large swaths of the Middle East, has led to more demand for U.S. petroleum products, particularly jet fuel.
“Really, the big change in demand year over year is the pull into the export market since the conflict in Iran started. The recent [U.S. Department of Energy] data shows exports from the U.S. are up 470,000 barrels a day year over year,” said Gary Simmons, the company’s executive vice president, during a quarterly earnings call. “The export demand for distillate, especially jet, has been very strong with interest for U.S. Gulf Coast barrels from all over the world.”
Oil barrel prices have jumped from $57.54 at the beginning of the year to $94.29 at the end of March, according to the U.S. Energy Information Administration’s tracking of crude oil. Prices have also jumped at the pump, though that hasn’t affected domestic demand, Simmons added. Demand for gasoline and diesel are both slightly up, he said.
Valero hasn’t slowed down production during the Strait of Hormuz crisis. It refined 100,000 additional barrels of oil per day, on average, compared to the first quarter of 2025.
Chief Financial Officer Homer Bhullar said Valero had maintained a “disciplined capital allocation network,” holding cash reserves to give the company options in the face of a volatile oil market. Valero distributed $938 million in cash returns to shareholders in the first quarter, but held more than $5 billion in cash reserves.
Rich Walsh, Valero’s general counsel, said the company did not anticipate limits on exports or other actions to limit oil and gas prices in the U.S. after discussions with the Trump administration. The global shortage was an opportunity to take advantage of U.S. energy supplies and create profits.
“We’re not positioned like some other countries where they just don’t have the resources that we have,” Walsh said. “I don’t think those kinds of strategies really make sense for us. I think the administration is well aware of that, and I don’t think there’s any real meaningful potential for that to happen.”
It’s the second major geopolitical event of the year to aid margins for the San Antonio company. Valero has increased its supply from Venezuela. The U.S. nailed down to oil supply agreements and dropped tariffs with the South American country after President Nicolás Maduro was captured by U.S. forces on Jan. 3.
“The availability of incremental Venezuelan supply resulted in wider approved differentials. Our advantaged Gulf Coast refining network was well positioned to benefit,” CEO Lane Riggs told investors.
Riggs added that Valero would lean into those processing trends as the year went on.
Valero is projecting lower production in the second quarter of 2026 compared to a year ago. During the earnings call, Bhullar said Valero could produce between 2.74 million and 2.84 million barrels of oil per day, compared to 2.9 million in the second quarter of 2025.
That’s not due to geopolitics, though. Valero is looking at reduced output at refineries in California and Texas.
In 2025, Valero announced it would wind down operations at a refinery in Benecia, California. The company was fined $3.25 million for air pollution issues this month.
In March, an explosion rocked Valero’s Port Arthur facility, near Beaumont.
There were no injuries to workers, though nearby residents have raised concerns. On Thursday, officials said investigations into the explosion were ongoing. They expect production to return in May, but certain pieces of equipment will still need repairs through the end of the year and, possibly, beyond.
