UBS Sees Phillips 66 (PSX) Blazing Past its Record High

Phillips 66 (NYSE: PSX ) has almost doubled in value since the beginning of 2026, propelled by the high refining margins amid the US-Iran war, which has significantly reduced the world's refining capacity and tightened supplies of gasoline, diesel, and jet fuel.

With PSX currently trading near its all-time high, investors are beginning to question whether the American refiner's rally has run its course. UBS, however, appears to see further upside ahead. On September 8, the firm raised its price target on PSX from $235 to $300, while reiterating a 'Buy' rating on the shares. The revised target implies an upside of over 15% from the current levels and even stands above the stock's record high of over $263 achieved earlier this month.

UBS believes Phillips 66 is well-positioned to deliver sustained value creation as refining, chemicals, and renewable diesel margins remain elevated for longer than previously expected. The analyst noted that the potentially higher structural refining margins, combined with disciplined allocation, could support attractive long-term returns for shareholders.

Strong Margins, Lower Debt, Bigger Buybacks:

The strongest bullish argument for Phillips 66 is the continued strength of the global refining market, particularly following renewed tensions between Washington and Tehran. Moreover, even if crude supplies in the Middle East return to normal, the damaged or idled refineries are likely to take considerable time to resume full operations, keeping refined-fuel markets constrained. The supply disruptions are emerging also beyond the troubled region, as a recent series of Ukrainian attacks on Russian refineries has further constrained global refining capacity and provided further support to margins.

Phillips 66 also remains bullish, and the company's Executive Vice President of Marketing and Commercial, Brian Mandell, said last month that the global markets are short 7 million barrels per day (bpd) of refined products from the Middle East and Asia, along with another 1.4 million bpd from Russia. According to Mr. Mandell, "this really sets us up for stronger margins through Q3 and perhaps the rest of next year".

PSX capitalized on the elevated crack spreads in the second quarter, delivering its strongest ​quarterly profit since Russia's invasion of Ukraine back in 2022. The company used the additional cash to improve its balance sheet, reducing net debt by nearly 25% sequentially to $16.5 billion. PSX remains on track to bring its net debt below the $16 billion mark by the end of 2026. Meanwhile, the refiner further increased shareholder returns by approving a $10 billion expansion of its share repurchase program in July.