3-2-1 crack spread near $70 a barrel: what it means for refining stocks

The 3-2-1 crack spread, a key indicator of refining profitability, has reached an unprecedented $69 per barrel. This is significantly higher than historical norms of $15–$25 per barrel and even its peak of $50–$60 during the 2022 Russia-Ukraine supply crisis. The spread is calculated by comparing the value of gasoline and heating oil produced from three barrels of crude oil, minus the cost of the crude itself.

The current high is due to disruptions in global refining capacity, with an estimated 5–6 million barrels per day lost due to issues in the Strait of Hormiz and Russian refining infrastructure. This has created a supply-demand imbalance, pushing crack spreads to these unprecedented levels. Major refiners, such as Marathon Petroleum, Phillips 66, and Valero Energy, have reported record profits, with Valero Energy alone earning $3.7 billion in Q2 2026 and returning $5 billion to shareholders.

Analysts have noted that the high crack spread represents a significant opportunity for these companies, but also a potential risk if the supply issues are not resolved soon.