Valero Energy posted sharply higher second-quarter refining margins from a year ago, powered by lower feedstock costs as the second-largest U.S. refinery operator consumed more heavily discounted Venezuelan crude, Vice President of Crude and Feedstocks Supply and Trading Randy Hawkins said Thursday.

Valero also expects diesel prices to remain well supported on robust export demand amid lower Russian supply and increasing heating oil consumption heading into the colder months.

Valero, which owns 14 oil refineries in the U.S., Canada and the U.K., said low feedstock costs from Venezuelan crude provided the "biggest tailwind" to stellar Q2 financial results.

During a call with analysts, Hawkins said the company has been encouraged by the growth of available heavy crude supply out of Venezuela. He said Valero has in recent years been the biggest U.S. consumer of Venezuelan crude and that trend will continue going forward.

Valero's complex Gulf Coast refineries can process high volumes of heavy, highly acid and relatively cheaper crude grades like Venezuelan and Canadian, which helps improve refining margins.

In June, Canadian heavy crude prices increased due to weather-related production issues, prompting Valero to pivot to consuming more Venezuelan oil, Hawkins said.

"We would expect to see processing rates of Venezuelan heavy crude in the coming months that exceed our historical maximum," he said.

The company said its Q2 refining margin was $6.342 billion, almost double that of $3.284 billion in the same quarter last year. During the period, net income also jumped to $4.073 billion from $663 million in the year-ago quarter.

Chief Operating Officer Gary Simmons said during the call that South American markets that had been dependent on Russian diesel exports "have come to the U.S. Gulf Coast to pull the diesel, which has caused prices to escalate."

Moscow on Thursday extended Russia's fuel export ban until the end of January 2027. The restriction was introduced on July 8 in a bid to address domestic fuel shortages caused by continuous Ukrainian drone strikes on Russian refineries and other oil infrastructure.

In addition, Simmons said distillate buyers are starting to come back to the market to replenish heating oil inventories ahead of rising demand in the colder months.

During the call, Valero also said repairs to a diesel hydrotreating unit at its 424,000 b/d Port Arthur, Texas, refinery are expected to be completed by the end of this year. The Port Arthur refinery has been shut down since late March after a fire broke out at the diesel hydrotreater.

In addition, the company said a project to improve a fluid catalytic cracking unit's capacity to manufacture high-value products at its 235,000 b/d St.

Charles refinery in Norco, La., is expected to be completed during Q3.