PTTEP and Refinery Stocks to Benefit from Rising Oil Prices amid Geopolitical Tensions

Thai energy and refinery stocks are expecting to benefit from rising crude oil prices amid geopolitical tensions around the world that are squeezing global supply.

The prices of West Texas Intermediate (WTI) and Brent crude oil have increased following consecutive events, including attacks by Ukrainian forces on oil refineries and infrastructure in Russia. Furthermore, escalating conflicts in the Middle East have intensified. The recent attack by Israel on Iran’s consulate in Syria has pushed Brent crude oil prices to touch $90 per barrel, the highest since October 2023.

A drone from Ukraine targeted Russia’s third-largest oil refinery on Tuesday, located approximately 1,300 km (800 miles) away from the conflict zone. The strike hit a processing unit that handles around 155,000 barrels of crude oil daily. However, according to an industry insider, the attack did not cause significant damage to the refinery.

Meanwhile, the market expected OPEC and its allies (OPEC+), who held a meeting on April 3, to extend the production cut until June, which would support the prices of energy and refinery stocks.

Kasikorn Securities (KS) anticipated that the recent attacks would tighten the supply of refined oil in Asia, resulting from reduced oil exports from Russia. This affected the refining costs in the region, raising the risk of Russia’s retaliatory actions and, therefore, increasing geopolitical risks and influencing crude oil trading prices with higher premiums.

Moreover, the recent price surge to the highest level in five months was supported by reports of decreased crude oil stocks in the United States and expectations from the latest OPEC+ meeting. The analyst gave “BUY” recommendations for PTTEP with a target price of THB 180 and TOP with a target price of THB 61.60, while giving a “Speculative-Buy” recommendation for SPRC with a target price of THB 9.60.