Where we heard itCNBC’s Squawk Box, Oct. 12, 2026. Speaker: Matt Smith, director of commodity research at Kpler.
On CNBC, Matt Smith, director of commodity research at Kpler, was asked whether new refineries are coming to the U.S. He replied: “In the U.S.? I wouldn’t think so. We’re going to be seeing refineries close before we see another one. We won’t see another one built, no.”
Smith’s case rests on scarcity: American refiners are winning because capacity is fixed, global supply keeps getting disrupted, and buyers have to come to them.
How Far Valero Has Already Run
Valero EnergyVLO is one of the largest independent U.S. refiners. We use it here as a gauge for the whole sector. At Monday’s close on Oct. 12, shares stood at $436.00, up 167.8% year to date, or 171.8% including dividends. The SPDR S&P 500 ETFSPY returned 15.0% including dividends over the same period. Including dividends, Valero’s one-year return is 181.8%, and its five-year return is 544.9%. The refiners are part of a bigger run: energy stocks are up more than 50% this year.
Valero’s own presence is shrinking. It ceased refining at its Benicia, California refinery by the end of April 2026 after booking a $1.1 billion impairment on its California plants. Its growth spending goes into existing sites, including a $230 million upgrade at St. Charles. Second-quarter adjusted EPS of $12.54 beat the $9.87 consensus estimate, according to the earnings release Valero filed with the SEC and Zacks. On the July call, CEO Lane Riggs pointed to “low global product inventories” and “limited excess refining capacity.”
Valero’s second quarter at a glance
Smith: Buyers Treat the U.S. as a Supplier of Last Resort
Matt Smith laid out the core claim: “The U.S. is in a much better situation than most, right? That’s why everyone is coming to the U.S. as a destination, as a supplier of last resort, because we’ve got record diesel exports.”
Government data back him up. U.S. exports of diesel and other distillate fuel hit 1.94 million barrels a day in the week ended Aug. 7, 2026, the highest in the Energy Information Administration’s weekly series, which began in 2010.
That was one of six weeks this year among the 10 biggest in the series, including the top three. The busiest weeks before 2026 came in August 2024 and June 2018, at about 1.85 million and 1.84 million barrels a day. In the monthly figures, July’s 1.745 million barrels a day came within 5,000 of the record set in July 2017.
Six of the 10 biggest weeks for U.S. diesel exports came this year
U.S. exports of diesel and other distillate fuel, week by week since the EIA’s weekly series began in 2010. Each row is a year. Darker means more barrels. 2026 is the coral row.
Sanctions, war damage or attacks pull refined product off the market. Buyers who can’t source fuel locally then turn to whoever still has extra barrels, and prices rise with that demand.
A Russia Cease-Fire Would Free Up American Diesel
A Russia-Ukraine energy cease-fire would keep Russian diesel flowing to its usual markets, and the benefit would reach the U.S. indirectly. Matt Smith explained: “These barrels of diesel are not going to flow to the U.S. But what it means is it eases the competition for U.S. barrels. Russia sends a lot of diesel to Brazil. The U.S. has had to send that to Brazil instead because Brazil isn’t able to buy it from Russia anymore.”
If Russian diesel goes back to its old buyers, foreign demand stops pulling American diesel abroad to fill the gap. More of it then stays in the U.S. market. That reaches well past refiners, because diesel moves nearly everything households buy.
Matt Smith also recommended caution: “We have to take the cease fire with a grain of salt, right. It needs both of them to be involved. Otherwise, it is just a declaration by President Trump rather than an agreement.”
Saudi Airport Strikes Raise the Stakes
Reuters reported on October 12, 2026 that the Saudi capital’s airport will stay closed this week as airlines cancel flights, and the BBC reported that a Saudi minister vowed a “serious response”. CNBC reported the kingdom saying drones and missiles were still targeting it as Iran-backed Houthis stepped up attacks. Reuters also reported that Saudi Arabia faced new missile and drone fire after major attacks on airports, and DW reported that the strikes fuelled fears of a wider Middle East conflict. The Houthis hit Saudi airports within a day of losing the Bab el-Mandeb coast to Yemeni government forces.
Matt Smith said he expects more of this: “We should expect both the Houthis and the Iranians to be ramping up attacks here as we get closer to the midterms.” That is his forecast, and nobody has confirmed any such plan.
The airport closure still matters to energy investors. It shows that attacks are getting through Saudi air defenses, and the market prices in the risk to the country’s energy infrastructure.
Risks Built Into the Scarcity Thesis
Refining is a famously cyclical business. Margins that widen during disruptions narrow once the disruptions end. Any argument built on other people’s supply problems fades when those problems are fixed.
By Smith’s own logic, a cease-fire that frees up Russian barrels would also ease the scarcity that has propped up American margins. His argument contains both effects.
A sector that has climbed this far already reflects a lot of good news in its price. Fixed capacity also caps volume, so any further earnings growth has to come from margins.
That leaves investors with one question: are they buying a permanent structural position or a very good moment in a cyclical business? The answer depends on how long the disruptions last.
Smith expects U.S. refineries to close before a new one is built, which leaves American refiners as the supplier the world turns to when fuel runs short. Valero shares have nearly tripled in a year on that scarcity. The risk is that a Russia cease-fire or calmer Middle East would ease the shortage that is lifting refining margins.