Refiner ETF at Record High After Russia Export Ban

Refiner ETF at Record High After Russia Export Ban

The country’s ban makes a tight market even tighter, impacting oil ETFs.

sumit
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Senior ETF Analyst
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Reviewed by: etf.com Staff
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Edited by: Sean Allocca

The market for refined oil products is about to get tighter. On Thursday, Russia announced that it would be temporarily restricting exports of gasoline and diesel in an effort to stabilize domestic prices. 

The news sent the price of diesel up by as much as 5%, briefly putting it near the highest levels of the year. 

Russia is a major exporter of diesel, having shipped 30 million barrels of the fuel abroad in August, according to Kpler, a provider of commodity market data and analytics. By comparison, it only exported 90,000 barrels of gasoline during the month. 

Officially, the export curbs are meant to alleviate shortages of refined oil products in Russia— though some analysts believe that they may be designed to hurt Europe ahead of the Northern Hemisphere winter as well.  
 
Regardless of the reason, Russia’s export ban is putting upward pressure on prices for refined oil products, and diesel in particular—tightening a market that was already grappling with a lack of supply.  

“Refinery margins hit an eight-month high in August as refiners struggled to keep up with oil demand growth, especially for middle distillates. Product cracks and margins reached near-record levels due to unplanned outages, feedstock quality issues, supply chain bottlenecks and low stocks,” the International Energy Agency said in its latest Oil Market Report. 

ETFs Impacted by Russian Oil Ban

High refinery margins bode well for stocks of oil refiners, who profit from the spread between the price of crude oil and the price of refined products. 

If those margins are near record levels, refiners stand to make a handsome profit. 

Indeed, we’ve seen stocks of Valero, Phillips 66, and Marathon Petroleum reach all-time highs on the back of the Russia export ban. 

That’s pushed the VanEck Oil Refiners ETF (CRAK) to record highs as well. The ETF, which holds stocks of companies involved in oil refining, is up 13% this year, more than double the 5% gain for the broader Energy Select Sector SPDR Fund (XLE)

CRAK has $33 million in assets under management and a 2.9% yield.  

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.