Is the Current Oil Price Favorable for Par Pacific's Refining Business?

With West Texas Intermediate (WTI) oil prices currently trading below $60 per barrel, according to data from Oilprice.com, which is significantly lower than a year ago, the overall energy business is now highly uncertain. However, unlike many other energy players, Par Pacific Holdings Inc. PARR is likely to gain from the current crude pricing environment.

This is because Par Pacific is mainly a refining company with the capacity to process 219,000 barrels of oil daily. As a refining company, PARR is now able to purchase oil at a lower cost, enabling the production of end products, such as gasoline and distillates. Additionally, crude prices are likely to remain soft in the coming days, as the U.S. Energy Information Administration (“EIA”) expects global oil inventories to continue increasing. 

EIA projects the spot average West Texas Intermediate price for 2026 at $51.26 per barrel, lower than the estimated $65.15 per barrel in 2025. Thus, Par Pacific, which generates the majority of its gross margin from refining activities, is likely to benefit from soft oil prices.

PSX & VLO Also Poised to Gain

Phillips 66 PSX and Valero Energy Corporation VLO, two other refiner majors, are also likely to benefit from the ongoing relatively low oil prices.

Refining operations continue to contribute to PSX’s earnings. Moreover, Phillips 66 expects refining to continue to back its bottom line considerably after its midstream activities. 

Valero Energy, with 15 refineries, has a throughput capacity of 3.2 million barrels per day. VLO mentioned that its refining activities are capable of generating sufficient cash flows to support shareholders’ returns along with growth.

PARR’s Price Performance, Valuation & Estimates

Shares of PARR have gained 184% over the past year compared with the 17.3% rise of the composite stocks belonging to the industry.

From a valuation standpoint, PARR trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.47X. This is above the broader industry average of 4.56X.

The Zacks Consensus Estimate for PARR’s 2025 earnings has seen upward revisions over the past seven days.

Par Pacific currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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