Star Petroleum Refining Co Ltd

The G7 nations have agreed to release a combined 100 million barrels of crude oil and diesel onto the market. The measure takes effect immediately and will remain in force for four months, and includes the release of a large volume of diesel within 20 days, with further discussions on additional diesel releases if necessary. It remains unclear how much of the volume in this new agreement will come from the 400 million barrels announced by the International Energy Agency. France proposed that European countries release 50 million barrels of diesel and that IEA members release 50 million barrels of crude. Meanwhile, an online meeting of seven OPEC+ members decided to hold the November 2026 oil production target unchanged for a second consecutive month, after raising the target by 188,000 barrels per day in September 2026. Saudi Arabia cut its official selling price for Arab Light crude for November 2026 delivery to Asian customers to 5.0 dollars per barrel, below the Oman and Dubai average, compared with 3.0 dollars per barrel in October 2026. Dao Securities holds a negative view on the oil business, both upstream and refining, given this news and the short-term outlook for crude prices, but is neutral on the medium-term picture. It maintains an "equal weight" investment rating for the energy sector, with recommendations of PTTEP at buy with a target of 180.00 baht, TOP at hold with a target of 70.00 baht, SPRC at hold with a target of 12.00 baht, and BCP at hold with a target of 50.00 baht.

Asia Plus Securities reported that the Oil Fund's position as of 20 September 2026 showed a deficit of 92.3 billion baht, split into a 52.3 billion baht deficit in the oil account and a 40 billion baht deficit in the LPG account. The fund carries an average payout burden of about 700 million baht per day, meaning it is likely to exceed a 100 billion baht deficit by the end of September. The existing 20 billion baht loan facility has already been fully drawn. The government has three main approaches to managing the burden: seeking an allocation from the 400 billion baht under the emergency decree, and if that is insufficient, possibly borrowing an additional 100 billion baht with a possible request for a Ministry of Finance guarantee; gradually reducing subsidies or ending the diesel price freeze; and using targeted relief measures. The government is also applying a measure to cut refinery prices for B0, B7 and B20 diesel by 4 baht per litre from 16 September to 31 October 2026, alongside the fund. The research team views each option as having different impacts. The liquidity top-up approach would have a limited effect on operators and help reduce volume-sales risk for OR and PTG, while the subsidy-reduction approach would pressure purchasing power and oil consumption volumes. The burden-shifting approach would raise risks to marketing margins and profits for the refinery group, namely TOP, BCP, IRPC, SPRC and PTTGC, and would also pressure the per-litre gross margins of OR and PTG.

The Thai stock market swung lower and fell below the 1,600-point level during September 14-18, 2026, with DELTA the main stock weighing on the index after its parent company issued a $1.5 billion convertible bond exchangeable into DELTA shares. The conversion price was set at a premium of 15-20% for a one-year tenor, equivalent to 289-302 baht, and 30-40% for a five-year tenor, equivalent to 327-353 baht. As a result, bondholders short-sold the shares to reduce price risk. The bond was split into a one-year tranche worth $500 million and a five-year tranche worth $1.0 billion, issued by Delta of Taiwan to fund business expansion. Meanwhile, the Fed meeting raised interest rates by 25 basis points to 3.75-4.00%, as the market expected, and the Dot Plot projected rates at 4.1% for both end-2026 and end-2027. Tourism-related stocks AOT, MINT and CENTEL were pressured by the delay of the Thai Tiew Thai Plus measure from late 2026 to 2027. Oil and refinery stocks TOP, SPRC and BCP were pressured by an announcement in the Royal Gazette cutting the ex-refinery price for high-speed diesel by 4.00 baht per litre, from a previous reduction of 2.40 baht per litre. Banking stocks KBANK, KTB and BBL, along with insurers BLA and TLI, rose on expectations that interest rates are on an upward trend.

The Energy Policy Administration Committee resolved to revoke its September 9, 2026 announcement that cut the refinery-gate diesel price by 2.40 baht per litre, and to raise that discount for diesel to 4.00 baht per litre from September 16, 2026 to October 31, 2026. As a result, Dao Securities holds a negative view on the refinery group given heightened policy risk, believing the impact on earnings and cash flow, from largest to smallest, falls on BCP, TOP, PTTGC, IRPC and SPRC. It maintained an equal-weight stance on the energy sector and advised avoiding refinery stocks for now, with a hold rating on TOP and a target of 70.00 baht, a hold on SPRC with a target of 12.00 baht, and a buy on BCP with a target of 50.00 baht. It also continues to favour PTTEP with a buy rating and a target of 180.00 baht, on the back of average selling prices for oil trending higher again in the third quarter of 2026. Meanwhile, Krungsri Securities views the refinery group as slightly negative after the government sought a larger-than-expected diesel price discount from refineries. If the government keeps requesting a 4 baht per litre diesel discount through the end of 2026, earnings forecasts would see downside of about 6% for TOP, 8% for SPRC and 7% for BCP, while target prices would be affected by about 1.4% for TOP, 2.2% for SPRC and 2.8% for BCP respectively. It nonetheless remains bullish on the refinery group on expectations of tight supply, picking TOP as its top pick, and expects the CFP project to begin commercial operation in the third quarter of 2028 as a factor supporting long-term growth potential.

Krungsri Securities maintains a BULLISH view on the refinery sector, expecting that over the long term in 2026-2028 the group will stand out on tightening supply trends and limited new capacity coming online, keeping refining margins above the 10-year average. Although spreads will normalize, they can still generate strong cash flow and sustain high dividend payouts. It selects TOP as its top pick on growth prospects and stronger long-term competitiveness than peers after the CFP project starts commercial operation in the third quarter of 2028, with a buy recommendation and a target price of 83 baht. In the case that the Oil Fuel Fund Committee resolves to cut the ex-refinery price of diesel by 4 baht per liter from 16 September to 31 October 2026 to ease the cost of living during the Middle East conflict, the research team views this as slightly negative for the refinery group, implying downside of about 3-4% to group earnings forecasts and trimming 2027 target prices by roughly 0.6-1.2%. If the government extends the 4 baht per liter discount through the end of 2026, earnings forecasts would see downside of about 6% for TOP, about 8% for SPRC and about 7% for BCP, with target prices affected by about 1.4% for TOP, about 2.2% for SPRC and about 2.8% for BCP respectively. However, the research team believes that if product spreads begin to narrow after October 2026, the government is likely to reduce the diesel price discount over the remainder of the year, noting that state intervention will gradually ease in line with product spreads as oil prices return to normal levels, allowing the refinery group to keep generating strong cash flow and paying high dividends. If share prices in the sector decline, it sees that as a buying opportunity.

The Energy Policy Administration Committee, or EPAC, has issued a notice reducing the ex-refinery price for high-speed diesel, including B0, B7 and B20, by the same rate of 2.40 baht per litre, effective from 16 September to 31 October 2027, according to Asia Plus Securities. This announcement exercises powers under the Emergency Decree on the Prevention and Resolution of Fuel Shortages, B.E. 2516, to draw excess benefits from refining margins to lower costs at the refinery gate. It marks the seventh time the government has pulled profit margins from refinery operators to help ease the cost of living, and it extends the price intervention until the end of October 2027, from the previous round that was due to expire on 15 September 2027. The new round covers 46 days, split into 15 days affecting the third quarter of 2027 and 31 days in the fourth quarter of 2027. It is expected to affect the profits of refinery operators in proportion to their diesel production. PTTGC is estimated to be hit hardest at about 2.9 billion baht, BCP at about 2.19 billion baht, TOP at about 2.15 billion baht, IRPC at about 1.87 billion baht, and SPRC at about 994 million baht. Looking at the impact in the third quarter of 2027 alone, the pressure on refinery profits is heavier than in the second quarter of 2027. PTTGC is expected to take a total hit of about 5.0 billion baht, of which about 960 million baht comes from the latest measure. Next are BCP and TOP at about 3.7 billion baht and 3.6 billion baht respectively, with about 714 million and 608 million baht respectively from the latest round. IRPC is expected to take a total hit of about 3.2 billion baht, with 714 million baht from the latest round, while SPRC is expected to take a total hit of about 1.7 billion baht, with 324 million baht from the latest round. In the fourth quarter of 2027, between 1 and 31 October, PTTGC is expected to be affected by about 2.0 billion baht, BCP by about 1.48 billion baht, TOP by about 1.45 billion baht, IRPC by about 1.26 billion baht, and SPRC by about 670 million baht. This issue is seen as negative sentiment weighing on the refinery sector due to government intervention, along with high uncertainty over both the timeframe and the size of the refining margin cut, which could change in the period ahead. Meanwhile, the Singapore refining margin, which is referenced to TOP, has fallen to 16.9 US dollars per barrel in the third quarter of 2027 to date, from 21.3 US dollars per barrel in the second quarter of 2027. The research team recommends only seeking short-term trading opportunities based on fund flows into the energy sector, and to do so with caution.

Analysts estimate crude oil prices will remain elevated until 2027 if the Middle East conflict continues, with Brent crude recently at about 91.44 US dollars per barrel and West Texas Intermediate at about 85.45 dollars per barrel. If the war de-escalates, oil prices could fall to a range of 65 to 76 dollars per barrel, or an average of about 70 dollars in 2027. The Energy Policy Executive Committee has approved using excess benefits from July 2026 refining margins to cut the ex-refinery price of high-speed diesel by 2.40 baht per litre for another 31 days, the sixth such move, totalling more than 17 billion baht. This is expected to hit net profits of refinery groups in the third quarter of 2026 more than in the second quarter, with PTT Global Chemical affected most at about 4 billion baht, followed by Bangchak Corporation at about 2.98 billion baht, Thai Oil at about 2.93 billion baht, IRPC at about 2.5 billion baht, and Star Petroleum Refining at about 1.4 billion baht. Analysts recommend short-term speculative buying in line with oil price trends and waiting to gradually accumulate when the war eases, viewing PTT Exploration and Production as a direct beneficiary of higher crude prices while PTT benefits indirectly from the group's refining business.