Brent Crude Jumped 4% to $113. Trump Is Throwing $150 Million at Refiners
Washington is handing refiners $150 million to expand fuel supply at the same moment those same refiners are posting the biggest margins in their history. The tension between a record-profit industry and a government trying to lower pump prices before…
Brent crude for December delivery settled at $113.17 a barrel on Thursday, October 22, 2026, up $4.35, or 4%. That was a five-month high and Brent’s biggest gain in about two weeks. It left Brent up more than 80% this year, while WTI settled at $99.47, up $2.32, or 2.4%.
On the same day, President Trump said the government would release $150 million under the Defense Production Act to expand refining and bring down record diesel and gasoline prices.
That means Washington is paying for more fuel supply while refiners are making record margins. Valero Energy (NYSE:VLO | VLO Price Prediction) posted its best quarter ever but still closed down 2.40% at $426.28.
Among energy funds, United States Oil Fund (NYSEARCA:USO) rose 1.70% to $162.51, while the Energy Select Sector SPDR ETF (NYSEARCA:XLE) fell 0.87% to $67.57. For refiner shareholders, federal money aimed at more fuel supply cuts against companies that profit when fuel is scarce.
A Signed Memo With No Projects and No Price Tag
The signed document is an order invoking Section 303 of the Defense Production Act (DPA). That section lets the government fund capacity it thinks essential to national defense. The memo directs the War Department to use purchases, commitments, and financial instruments to expand production, storage, marine terminals, and pipelines, but it names no projects and no dollar figure.
The number came from the Energy Department, which plans to provide up to $150 million. The money will come out of $1 billion in DPA energy funding from last year’s tax-and-spending law, and the department says it will announce awards “in the near future.”
On October 13, Vice President JD Vance said the DPA would expand the Tyler, Texas, refinery owned by Delek US Holdings (NYSE:DK). The department has not announced any awards.
One Valero Quarter Next to a $150 Million Cap
In the third quarter alone, Valero made $8.8 billion in refining operating income and $6.8 billion in net income. The federal cap for the whole industry is $150 million.
Adjusted EPS of $23.90 beat the LSEG consensus of $21.07. Refining margin was $39.24 a barrel, up from $13.14 a year earlier. Chief Executive Lane Riggs said, “Our refineries operated at near-record utilization rates.”
Why a Record Quarter Sent Valero Lower
Refiners make the spread between what crude costs and what fuel sells for. A policy designed to add supply and lower pump prices works against that spread over time. On October 22, regular gasoline averaged $4.27 a gallon, and diesel averaged $6.30.
The drop in the stock likely shows fears that margins have peaked, along with political pressure on fuel prices ahead of the November 3 midterms. Because the DPA lets the government direct purchases and commitments, an administration focused on pump prices could use it to pressure refiners.
Refineries Are Already Running Near Full
U.S. refinery use averaged above 95% from May to September, the highest for those months since 1998. New storage and terminals will take years to build, so near-term margins depend on geopolitics.
A drone strike on Saudi Aramco’s Shaybah field killed two people, and Iran’s Revolutionary Guard said it hit four tankers. Trump wrote on Truth Social, “They are even making up fake hits, mines, and everything else,” which is his own disputed claim. Investors paid up for the oil price spike but questioned how long energy companies can hold on to the windfall.
What the Federal Program Means for Valero Stock
The federal program is a small part of a single quarter’s earnings, and any capacity it pays for will arrive long after this margin cycle plays out. The risks of peaking margins and pressure on pump prices before the election are real. Still, Valero’s $122.74 billion market value rests on cash flow that a $150 million program cannot dent. USO depends only on the geopolitical premium in crude prices, and XLE mixes refining in with the integrated majors.
The real moment arrives when the Energy Department names its awards. If they favor new refining units over storage and terminals, and Valero closes below $426.28 after November 3, the bear case is strengthening.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
