Summary · why it matters
Kasikorn Securities Public Company Limited assesses that the decline in Singapore reference refining margins is temporary. Margins fell from more than 20 US dollars per barrel at the start of the US-Iran conflict to around 7 US dollars per barrel, driven by seasonally weaker demand and increased exports of refined oil products from China. However, the refined products market is expected to tighten as winter approaches, supporting a recovery in Singapore refining margins in late the fourth quarter of 2026, with middle distillates as the main driver, given low diesel inventories, seasonally rising energy demand, low European natural gas inventories, and the possibility that European refineries will reduce runs. For the longer-term outlook, Kasikorn Securities expects global excess refining capacity to fall from 5.9 million barrels per day in 2025 to 4.7 million barrels per day by 2028, which would help Singapore refining margins gradually improve to 7–8 US dollars per barrel. On domestic factors, Kasikorn Securities estimates that the measure cutting ex-refinery diesel prices by 4 baht per litre could reduce profits of refinery companies by about 4–10%. Although it views the share price decline as having largely reflected that impact, there remains risk of further intervention if crude oil prices and diesel price spreads rise sharply. Meanwhile, Asia Plus Securities Company Limited stated that as of September 20, 2026, the Fuel Fund had a negative position of 92,300 million baht, comprising a negative oil account of 52,300 million baht and a negative liquefied petroleum gas account of 40,000 million baht, with average daily obligations of about 700 million baht. There is therefore a chance the fund's position will exceed a negative 100,000 million baht by the end of September, after the previous 20,000 million baht loan facility was fully used. It also stated that the measure cutting ex-refinery diesel prices for B0, B7, and B20 diesel by 4 baht per litre, effective from September 16 to October 31, 2026, is an issue to watch, especially the possibility of extending the measure after that period, which could add pressure on TOP, Bangchak Corporation Public Company Limited, or BCP, IRPC Public Company Limited, or IRPC, Star Petroleum Refining Public Company Limited, or SPRC, and PTT Global Chemical Public Company Limited, or PTTGC. Amid those risks, Kasikorn Securities still picks Thai Oil Public Company Limited, or TOP, as its top stock in the sector, citing attractive valuation and long-term profit growth potential from clean energy projects, with a "Buy" recommendation and a target price of 75.20 baht.
Star Petroleum Refining Co Ltd
IRPC Public Company Limited
Bangchak Corporation Public Company Limited
Thai Oil Public Company Limited
PTT Global Chemical Public Company Limited
Asia Plus Group Holdings PCL