Morgan Stanley wrote in its research paper, stating that Thailand has implemented a third diesel price hike since March 25, according to a recent announcement on April 1. The latest round of increases takes the diesel realization to approximately US$150 per barrel, compared to the current rate of US$240 per barrel. The government has leveraged its oil fund to soften the impact on consumers, but ballooning subsidies have led to an unsustainable deficit, now standing at US$1.3 billion.
While fuel price shocks tend to pose short-term challenges for fuel retailers, historical trends indicate improved earnings quality once the initial disruptions subside. The recent price adjustments seen in Thailand align with similar measures across several Asian countries that have also opted to increase fuel prices in response to tighter supply conditions.
As investor interest turns to fuel supply and market resilience, Morgan Stanley highlights several Thai fuel refiners poised to benefit from these developments. Bangchak Corporation (BCP) and PTT Global Chemical (PTTGC) are favored for potential upside, while Thai Oil (TOP) and PTT Oil and Retail (OR) earn equal weight rating.
Despite potential short-term headwinds in demand, Thailand’s strategic position includes two months’ worth of oil and fuel inventories. This reserves level positions the country favorably within the Asian region, trailing only India, China, Malaysia, and Japan in terms of oil feedstock access.
