The Top-Performing Energy Stocks Of Q3 2025

Markets carried their momentum into the third quarter of 2025, even as political uncertainty and softer labor data kept investors cautious.

The S&P 500 advanced 7.8% in Q3, a solid showing that reflected both moderating inflation and rising expectations for Federal Reserve rate cuts. For income and defensive investors, the period was constructive: dividend-paying sectors once again demonstrated resilience, while more cyclical industries delivered some of the strongest gains.

Across sectors, the rotation toward cyclical and commodity-linked stocks picked up steam. As rate expectations tilted toward easing and geopolitical risks flared, investors looked for places where real assets could still punch.

While sectors like Technology, Consumer Discretionary, and Communication Services led the charge, Energy turned in another strong quarter, with solid gains across nearly every major segment. The energy sector’s 6.2% gain in Q3 put it ahead of sectors like Real Estate, Materials, and Consumer Staples.

Despite softer crude prices, resilient demand for oil and gas, record U.S. LNG exports, and robust downstream margins combined to deliver broad-based performance for investors. Total returns across the sector averaged in the mid- to high-single digits, with refiners standing out as clear leaders.

As always, the returns discussed below reflect total returns, including dividends.

Upstream

According to data provider FactSet, pure oil and gas producers posted an average gain of 5.8% in Q3. While the sector’s performance was uneven, there were some notable winners.

APA Corporation was the standout among the larger names, jumping 34.6% on stronger-than-expected production volumes and favorable cost controls. ConocoPhillips, the largest of the upstream companies, posted a more modest 6.3% return, roughly in line with the overall sector average.

The quarter underscored how scale and efficiency remain critical differentiators in an environment where oil prices fluctuated but stayed comfortably above breakeven levels.

Midstream

Midstream companies as a group gained 8.2%, though tankers were the clear drivers of outperformance.

Scorpio Tankers, KNOT Offshore Partners, Frontline, and NGL Energy Partners all delivered gains north of 40% for the quarter, reflecting strong day rates and favorable supply-demand dynamics in global shipping.

Broader pipeline and storage operators benefited from steady transport volumes and the tailwind of record U.S. LNG exports, which continue to underpin toll-road style cash flows.

Downstream

The refining sector was the star of the energy sector in Q3, with the “Big Three” refiners generating an average return of 19.8%.

Valero Energy led the pack with a 27.7% gain, supported by robust Gulf Coast margins and strong export demand. Marathon Petroleum climbed 16.7%, while Phillips 66 advanced 15.1%.

Even with narrower crack spreads at times, refiners capitalized on resilient fuel demand, downstream integration, and international product flows, producing one of their best quarters in recent years.

Integrated Supermajors

The diversified giants also posted respectable gains, averaging 6.6% for the quarter.

BP was the top performer in this category, surging 16.8% as investors rewarded its balance of upstream exposure and downstream resilience. Most of its peers finished in the single digits, while TotalEnergies was the lone laggard, declining 1.6% as European policy pressures weighed on sentiment.

For investors, the quarter highlighted both the diversification advantage and the regional risk factors that come with owning these global majors.

Looking Ahead

As 2025 enters its final quarter, the energy sector faces a familiar mix of opportunity and risk. Global oil demand remains on track to hit a record 103.7 million barrels per day this year, while natural gas continues to capture market share in power generation and industrial use.

At the same time, capex discipline, cost inflation, and regulatory uncertainty will keep pressure on company strategies. With refiners enjoying momentum, midstream operators benefiting from LNG growth, and upstream producers still generating healthy cash flows at current oil prices, the sector is positioned to remain a defensive anchor in income and growth portfolios alike.

Investors should expect continued volatility but also recognize that energy’s combination of yield, cash generation, and structural demand resilience makes it one of the more compelling stories heading into 2026.

Source: https://www.forbes.com/sites/rrapier/2025/10/02/the-top-performing-energy-stocks-of-q3-2025/