Refinery stocks surge to lead the market as Saudi Arabia cuts Asian crude prices, boosting refining margins

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Summary · why it matters

Refinery stocks rose to lead the market at 10:01 a.m., with PTTGC up 3.98% to 52.25 baht, TOP up 2.80% to 73.50 baht, IRPC up 2.74% to 52.25 baht, BCP up 0.94% to 53.75 baht, and SPRC up 0.65% to 15.40 baht, after Saudi Arabia unexpectedly cut its official selling price, or OSP, for crude oil to Asian customers for November. Arab Light crude shipped to Asia was given a discount of 5 US dollars per barrel, or 3 US dollars per barrel more than the previous month, the widest discount since June 2020, contrary to market expectations that the OSP would be raised. KGI Securities (Thailand) views the price cut as aimed at offsetting sharply higher freight costs and helping preserve Saudi Arabia's market share in Asia. This is positive for Thai refinery stocks because it helps lower feedstock costs, especially for IRPC, which uses Arab Light crude in a significant proportion. Meanwhile, Krungsri Securities noted that the Arab Light crude price for delivery to buyers is around 5 dollars per barrel for November orders, the lowest in six years, and is a direct positive for Thai refinery operators, as the lower crude premium drives refining margins higher.

Impact on assets 7

Energy▲
IRPC Public Company Limited
IRPC
▲ PositiveSupplyrelevance

IRPC is highlighted as especially benefiting since it uses Arab Light crude in significant proportion, so the OSP cut directly lowers its feedstock costs.

Star Petroleum Refining Co Ltd
SPRC
▲ PositiveSupplyrelevance

Star Petroleum Refining gains as the Arab Light OSP discount lowers crude feedstock costs and drives refining margins higher.

Energy Transition & Power Demand▲
Financials▲
Materials▲