Here's Why Shares in PBF Energy Popped Higher (And are a Great Way to Hedge Geopolitical Conflict)
Key Points
Crack spreads are the key profitability metric for refiners like PBF.
Geopolitical tensions in the Strait of Hormuz are driving up spreads and benefiting PBF.
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Shares of petroleum refiner PBF Energy (NYSE: PBF) rose by 10.5% in the week to Friday morning. The reason for the move is pretty straightforward, but the factors that need to come together to stop it are anything but straightforward.
Why PBF stock is soaring
The refiner's stock is up almost 125% in 2026 as of the time of writing. The overall move and this week's performance are driven by higher crack spreads. In other words, the difference between the price of refined products and the key input price of crude oil.
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The most commonly followed crack spread is the so-called 3-2-1 crack spread. It represents the difference between two barrels of gasoline and one barrel of diesel compared to three barrels of crude oil. This is the key metric for PBF, rather than focusing solely on crude oil input prices. The good news, from PBF's perspective, is that the 3-2-1 crack spread has risen by double digits over the last week to close to $69.
It's a significant improvement from nearly $43 at the start of June, when optimism over a potential resolution to the hostilities with Iran was higher. It's also a massive increase from the $20 that it started in 2026 with.
Image source: Getty Images.
The Strait of Hormuz and PBF
The increase came as the memorandum of understanding with Iran collapsed, leading to an escalation in the conflict and, at the very least, restricting commercial traffic through the Strait of Hormuz. Not only does about a fifth of global crude oil flow through the Strait of Hormuz, but the Gulf countries are also major producers of refined oil products.
As such, it's not just a problem of non-US refiners getting hold of crude oil to refine; it's also an issue of a lack of refined products (jet fuel, etc.) hitting the market. All of which is a positive for PBF, because even though it has to pay a higher price for crude, it's still able to secure domestic crude oil and profit from widening crack spreads. Moreover, the longer traffic through the Strait is restricted, the more PBF is likely to benefit.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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