The Zacks Oil and Gas - Refining & Marketing industry is constantly shifting with global energy needs and policy pressures. Today, the sector is doing more than just supplying fuels; it is redefining its role in an evolving energy landscape. The focus is now on balancing reliable fossil fuel output with growing investments in cleaner, lower-carbon solutions. Refiners are pushing into renewable diesel and sustainable aviation fuel, using government incentives and rising corporate demand to create durable growth opportunities. At the same time, U.S. refiners are exporting more fuels to Latin America and Europe, capturing healthy margins while diversifying revenue streams. Volatility in crude prices and inflation-driven costs still threaten near-term earnings, but the sector’s adaptability remains evident. Against this backdrop, four names — Marathon Petroleum ((MPC Quick QuoteMPC - Free Report) ), Phillips 66 ((PSX Quick QuotePSX - Free Report) ), Galp Energia ((GLPEY Quick QuoteGLPEY - Free Report) ) and Par Pacific Holdings ((PARR Quick QuotePARR - Free Report) ) — stand out as uniquely positioned to balance profitability today with opportunity tomorrow.

Industry Overview

The Zacks Oil and Gas - Refining & Marketing industry consists of companies involved in selling refined petroleum products (including heating oil, gasoline, jet fuel, residual oil, etc.) and a plethora of non-energy materials (like asphalt, road salt, clay and gypsum). Some companies also operate refined product terminals, storage facilities and transportation services. The primary activity of these firms involves buying crude/other feedstocks and processing them into a wide variety of refined products. Refining margins are extremely volatile and generally reflect the state of petroleum product inventories, demand for refined products, imports, regional differences and capacity utilization in the industry. Other major determinants of refining profitability are the light/heavy and sweet/sour spreads. Refiners are also prone to unplanned outages.

3 Trends Defining the Oil and Gas - Refining & Marketing Industry's Future

Growing Role of Low-Carbon Solutions: While conventional fuels remain critical, refiners are expanding into renewable diesel, sustainable aviation fuel, and other low-carbon alternatives. Government incentives and rising corporate demand for cleaner fuels are accelerating these investments, positioning refiners for long-term relevance in a decarbonizing economy. Importantly, integrating renewable projects into existing infrastructure lowers costs and allows companies to balance near-term fossil fuel strength with long-term energy transition opportunities. This dual approach adds resilience to the industry’s future earnings profile.

Advantaged Export Opportunities: The refining industry is increasingly leveraging global arbitrage opportunities. Strong demand from international markets, particularly Latin America and Europe, has created an outlet for U.S. refined product exports, allowing refiners to capture higher margins abroad. Export access provides a natural hedge against domestic market softness while diversifying revenue streams. This global connectivity not only enhances profitability but also underscores the strategic importance of U.S. refining capacity in balancing global fuel supplies.

Margin Pressure from Volatile Crude and Product Prices: Despite recent strength, refining margins remain highly exposed to swings in crude oil prices and product spreads. A sudden easing of geopolitical tensions or an unexpected surge in global supply could compress crack spreads, squeezing profitability across the sector. Meanwhile, inflationary cost pressures—ranging from maintenance expenses to compliance with environmental regulations—further challenge earnings stability. Without consistent pricing tailwinds, refiners face the risk of earnings volatility and weaker shareholder returns.

Zacks Industry Rank Indicates Positive Outlook

The Zacks Oil and Gas - Refining & Marketing is a 15-stock group within the broader Zacks Oil - Energy sector. The industry currently carries a Zacks Industry Rank #56, which places it in the top 23% of 246 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates fairly strong near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Considering the encouraging dynamics of the industry, we will present a few stocks that you may want to consider for your portfolio. But it’s worth taking a look at the industry’s shareholder returns and current valuation first.

Industry Underperforms Sector & S&P 500

The Zacks Oil and Gas - Refining & Marketing industry has fared worse than the broader Zacks Oil - Energy Sector as well as the Zacks S&P 500 composite over the past year.

The industry has gone down 10.1% over this period compared with the broader sector’s decrease of 0.6%. Meanwhile, the S&P 500 has gained 15.9%.

One-Year Price Performance

Industry's Current Valuation

Since oil and gas companies are debt-laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio. This is because the valuation metric takes into account not just equity but also the level of debt. For capital-intensive companies, EV/EBITDA is a better valuation metric because it is not influenced by changing capital structures and ignores the effect of noncash expenses.

On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA), the industry is currently trading at 4.24X, significantly lower than the S&P 500’s 17.60X. It is also below the sector’s trailing 12-month EV/EBITDA of 4.92X.

Over the past five years, the industry has traded as high as 6.95X and as low as 1.79X, with a median of 3.63X, as the chart below shows.

Trailing 12-Month Enterprise Value-to-EBITDA (EV/EBITDA) Ratio (Past Five Years)

4 Stocks in Focus

Par Pacific Holdings: based in Houston, Par Pacific operates an integrated energy platform spanning refining, retail, and logistics. With 219,000 barrels per day of refining capacity, extensive storage and transportation assets, and over 100 fuel and convenience store locations, the Zacks Rank #1 (Strong Buy) company serves key western U.S. markets. Par Pacific balances conventional fuel supply with emerging decarbonization initiatives, while also holding a significant interest in natural gas production, positioning itself for both stability and future growth.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2025 earnings of Par Pacific indicates 394.6% growth. It has a market capitalization of $1.5 billion. Over the past 60 days, the Zacks Consensus Estimate for the company’s 2025 earnings has surged more than 500%. Shares of PARR have gained 43% in a year.

Price and Consensus: PARR

Galp Energia: It is a Portuguese integrated energy company with operations across exploration, production, refining, marketing, renewables, and commercial businesses. It operates two refineries in Portugal while maintaining a strong presence in oil and biofuels supply and trading. Producing over 100,000 barrels of oil equivalent per day and employing nearly 7,000 people, Galp balances its traditional energy base with investments in low-carbon solutions, aiming to deliver safe, affordable energy while advancing its decarbonisation strategy.

GLPEY, based in Lisbon, has a four-quarter average earnings surprise of 47.2%. The firm has a market capitalization of $13.1 billion. Over the past 60 days, the Zacks Consensus Estimate for Galp Energia’s 2025 earnings has moved up 21.8%. This Zacks Rank #2 (Buy) company’s shares have decreased 10.9% in a year.

Price and Consensus: GLPEY

Marathon Petroleum: It is a leading independent refiner, transporter and marketer of petroleum products. Marathon Petroleum's access to lower-cost crude in the Permian, Bakken, and Canada helps it benefit from the differentials. The Zacks Rank #3 (Hold) company’s exceptional cash flow generation and aggressive shareholder returns are the key drivers for stock price appreciation.

Findlay, OH-based Marathon Petroleum has a market capitalization of $50 billion. MPC beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. Over the past 60 days, the Zacks Consensus Estimate for Marathon Petroleum’s 2025 earnings has moved up 8.5%. Shares of MPC have lost 3.6% in a year.

Price and Consensus: MPC

Phillips 66: Headquartered in Houston, TX, Phillips 66 is one of the world’s largest independent refiners and a diversified energy company. Its portfolio spans refining, marketing, midstream and petrochemicals, with nearly 2 million barrels per day of refining capacity across U.S. and European sites. The company markets fuels through thousands of outlets worldwide and holds a 50% stake in Chevron Phillips Chemical. Formed in 2012 from a ConocoPhillips spin-off, Phillips 66 continues to blend scale with strategic growth.

Phillips 66’s expected EPS growth rate for three to five years is currently 15.5%, which compares favorably with the industry's growth rate of 9.8%. The company beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed in the other, the average being 19.2%. Shares of this Zacks Rank #3 company have lost 7.7% in a year.

 

Price and Consensus: PSX