As oil prices surged, raising the cost of living for Thai consumers, the government ordered a temporary reduction in refining fees. This directly impacts refineries. Recently, TOP, or Thai Oil Public Company Limited, announced that revenues are expected to fall by 2 billion baht. Although Q1 2026 may yield high profits due to rising oil prices, Q2 or Q3 could see losses because of the high costs of oil previously purchased.
Pongpan Amornwiwat, Chief Executive Officer and Managing Director of Thai Oil Public Company Limited (TOP). He stated that the conflict in the Middle East causing the closure of the Strait of Hormuz has driven oil prices higher this year. Recently, the government temporarily cut diesel refining fees by 3-5 baht per liter. However, these increased costs could reduce the company’s revenue by 2 billion baht.
Currently, refining fees in Thailand are benchmarked to Singapore prices, but additional costs from the war, such as War Premium and Trading Premium, have increased. Therefore, higher refining fees do not directly translate into higher refinery profits due to these added costs. Nevertheless, the company’s revenue still depends on oil price trends, similar to the 2008 crisis (Subprime Crisis), when Q1 saw high profits but the latter half of the year ended with zero or negative earnings.
Additionally, the government recently banned exports of all oil types. Although the company’s export revenue accounts for 10%, the export ban has caused oil inventories to soar near 70% capacity (with an 80% maximum threshold). Excess inventory risks forcing refineries to reduce production capacity, which could have broader impacts. To manage this, the company is building additional oil storage tanks and exploring alternatives such as leasing tanks or transferring stock to partners. They also plan to discuss with the government possible adjustments to future export regulations.
“Stockpiling oil is difficult because production runs 24 hours a day, and storage would overflow. We assure there is no hoarding and that all production processes are fully transparent and can be audited. We are ready to cooperate with the government for transparent inspections,” he said.
Given these factors, the overall financial performance in Q2 and Q3 may show losses, mainly because oil purchased in March-April was at relatively high prices compared to current lower prices. However, this is normal for the refining business, which must balance such risks. Close monitoring of the Middle East situation remains essential.
The company’s long-term plan continues to restructure oil production. The Clean Fuel Project (CFP), expected to complete in Q3 2028, will increase capacity from 275,000 barrels per day to 400,000 barrels per day. Production will focus more on diesel and jet fuel rather than fuel oil. In the future, crude oil sourcing is expected to diversify, reducing dependence on the Strait of Hormuz from 90% to around 40-50%, possibly increasing crude from Canada and South America.
Regarding retail oil prices in Thailand, currently managed by the Fuel Fund to stabilize consumer prices when necessary, using this fund for support is possible in the short term. However, once the situation stabilizes, other mechanisms should be considered, possibly targeting assistance to specific groups. Presently, the Fuel Fund is in deficit by over 63 billion baht, with Thai Oil bearing about 10 billion baht of this burden.
TOP reported Q1 2026 results showing that despite an increase in the average Dubai crude price, inventory purchased 1-2 months in advance and rising refined product prices globally led the group to recognize pre-tax stock gains of 22,557 million baht.
In summary, for Q1 2026 TOP recorded EBITDA of 31,641 million baht, up 389.65% year-on-year. Sales revenue was 114,809 million baht, an 8.04% increase year-on-year, and net profit reached 19,481 million baht, rising 455.96% year-on-year.
According to TOP data,SET
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