Kasikorn Securities (KS) highlights the recent explosion at the Valero oil refinery in Port Arthur, Texas, as reported by Al Jazeera, which resulted in visible flames and smoke at the site. The Valero facility is one of the largest oil refineries in the United States, with a production capacity ranging from approximately 380,000 to 430,000 barrels per day. It is also considered a key component in the nation’s energy supply chain.
The brokerage views this development as positive for refinery stocks such as TOP, BCP, and SPRC, as the explosion could lead to additional supply constraints on top of ongoing geopolitical tensions in the Middle East. This situation is expected to support higher refining margins in the medium term.
Furthermore, Kasikorn notes, based on discussions with IVL’s management, that the company is not directly affected by the incident, as it does not source feedstock from the affected refinery.
Kasikorn maintains TOP as its top pick among refinery stocks. The company’s share price has shown the least recovery compared to pre-war levels, while the risk to crude oil supplies has lessened following the release of strategic reserves by the IEA.
Additionally, TOP has diversified its crude sourcing, reducing its dependence on the Middle East from 90% to 30%.
