According to an analysis by CLSA, the Energy Policy Administration Committee, under the leadership of Thailand’s energy minister, is on the verge of making a significant decision regarding ex-refinery diesel prices, set to take effect from April 23, 2026. This follows a recent move by the government on April 9, in which it reduced ex-refinery diesel prices by THB 2 per litre through the invocation of the 1973 Emergency Decree.
That cut corresponded to a $4 per barrel decrease in gross refining margin (GRM) for local refiners. With the government referencing GRM figures from the first half of April—which nearly doubled the March figure—it is likely that the new reduction could range between THB 2 and THB 3 per litre. Such measures are expected to create short-term pressure on refining company share prices.
These price adjustments are part of broader government efforts to ease the financial strain on the Oil Fuel Fund, which has shifted from a net cash position before the onset of Middle East conflicts to a THB 60 billion deficit. The stated rationale for the intervention points to unusually high GRM levels generating outsized profits for refiners.
The diesel price reduction, based on early-April GRM data, could potentially surpass the previous THB 2 per litre cut, as preliminary numbers showed GRM soaring to THB 17.4 per litre in early April, up from THB 7.5 in March and well above the five-year average of around THB 2.5.
However, these calculations do not yet account for additional costs such as crude premiums, insurance, and increased freight—which, once factored in, still leave refiners with elevated margins. Notably, the price reduction will only impact results from the second quarter of 2026 onwards, sparing first-quarter operations.
The continued unpredictability of ex-refinery pricing creates complications for corporate strategy. State energy giant PTT is currently in the process of identifying strategic partners for its petrochemical and refinery subsidiaries, with a shortlist of candidates expected by mid-2026. Potential collaborators include major oil firms and oil traders from the Middle East.
Nonetheless, the government’s ongoing interventions may generate hesitancy among investors, particularly given the opacity around future refining margins. CLSA argues that a more transparent and equitable policy framework would be essential for sustaining long-term investment appetite.
On the operational side, Thai refiners currently allocate 40-45% of their output to diesel, and their GRMs have seen significant volatility in April, reflecting the unstable geopolitical and logistics environment.
Recent assessments by the brokerage place Thai refinery GRMs at $15-18 per barrel this month, a notable decline from the $30-40 seen during periods of heightened military tension but still higher than the $6-8 range before the onset of the conflict between the United States and Iran.
With a THB 2 per litre reduction in ex-refinery diesel prices already slashing approximately $4 per barrel from refiner GRMs, any further cut to THB 3 per litre (an equivalent $6 per barrel reduction) could effectively erase the extra profits garnered since the conflict began.
As most refiners’ share prices have already retreated to pre-conflict levels, the prospect of ongoing government intervention is likely to keep the sector under pressure until greater clarity emerges regarding the size of future price cuts and the durability of state involvement in refining economics.
