Kiatnakin Phatra Securities (KKPS) has upgraded its Singapore gross refining margin (SG GRM) forecasts, citing a tighter global refining balance that should support stronger margins through 2027.
The brokerage raised its SG GRM forecast to US$19.6 per barrel for 2026 from US$5.4 per barrel, and to US$9.6 per barrel for 2027 from below US$6 per barrel. KKPS expects the global refining balance to remain tight until 2027, supported by modest new refining supply, continued fuel supply disruptions from the Russia-Ukraine conflict, damaged Middle East refining facilities, and fuel demand replenishment.
KKPS said SG GRM appears on track to deliver another strong quarter in 3Q26, with estimated SG GRM of US$25.2 per barrel, compared with US$24.7 per barrel in 2Q26. However, Asian refiners’ realized GRM could soften sequentially as lagged crude costs offset headline margins. The brokerage expects margins to begin normalizing gradually from 4Q26, with SG GRM declining to US$16.8 per barrel, while crude premiums are expected to ease from the high levels seen in 1H26.
On supply, KKPS said new refining capacity additions have largely disappeared after two waves of increased capacity, setting the stage for a tightening refining system toward the end of the decade. Net refining capacity additions are expected at around 300,000 barrels per day in 2026 and 900,000 barrels per day in 2027, before the system tightens during 2028-2030 as closures outpace additions. Global oil demand is expected to shift from growth of 1.0 million barrels per day in 2025 to a contraction of 400,000 barrels per day in 2026, before normalizing to average growth of around 1.0 million barrels per day during 2027-2028.
KKPS reiterated its constructive view on the Thai refining sector. The brokerage raised Star Petroleum Refining Public Company Limited’s (SPRC) price objective by 64.4% to Bt14.8 per share from Bt9.00, reflecting a 54% uplift in 2027E net profit after tax from higher GRM and target P/E and P/B assumptions.
For Thai Oil Public Company Limited (TOP), KKPS previously raised its price objective by 7.3% to Bt80.5, supported by an 8.5% 2027E net profit upgrade alongside the SG GRM upward revision. The brokerage identified TOP as its preferred pick, citing the strong global refining margin trend, de-risking of its financial and construction risk profile, and cheaper valuation versus global peers. SPRC follows as another preferred exposure due to its high dividend yield and attractive valuation.
