Jefferies Cuts Valero and Marathon to Hold as Diesel Export Ban Threat Clouds Refining Outlook

Jefferies downgraded both Valero Energy and Marathon Petroleum from Buy to Hold on September 22, citing a deteriorating refining margin outlook and growing political risks. Jefferies set a revised price target of $401 for Valero and $413 for Marathon Petroleum, reflecting caution after both stocks had participated in a powerful rally that more than doubled the S&P Composite 1500 Oil and Gas Refining and Marketing Index this year.

The downgrades came against a backdrop of record US retail diesel prices, which have surpassed $6.50 a gallon for the first time ever, with GasBuddy data showing 47 of 50 states setting all-time diesel price records in 2026. The surge has been a windfall for major refiners: Valero, Marathon Petroleum, and Phillips 66 each saw quarterly earnings per share nearly quadruple year-over-year. Americans have spent a combined $116.1 billion more on gasoline and diesel since March 1 compared to the same period a year earlier, including $71 billion more on gasoline and $41 billion more on diesel.

The central new risk flagged by analysts is political. Politico reported that President Trump is facing calls from Republican allies to restrict diesel exports, with November midterm elections approaching and retail prices at record highs. That threat of an export restriction, combined with concerns about demand destruction at current price levels, has shifted the risk-reward calculus for refining stocks after their outsized gains. Both Valero and Marathon shares fell approximately 2% on Tuesday, and the S&P refining index dropped for a second consecutive session, losing about 1%.