Thaioil warns market risks remain despite Q1 profit rise amid oil volatility
Thaioil warns Q2 profit may weaken as oil price swings and liquidity strain follow a Q1 result boosted by temporary stock gains.
Thai Oil Plc, or Thaioil, posted higher net profit in the first quarter of 2026, but said it is closely monitoring market conditions and strengthening risk management to navigate ongoing volatility.
Pongpun Amornvivat, chief executive officer and president of Thaioil, said the company recorded a net profit of 19.48 billion baht in the first quarter, driven mainly by stock gains, net of write-downs on crude oil and petroleum product inventories, totalling 16.74 billion baht.
The gains were supported by a short-term rise in crude oil and global refined oil prices following geopolitical tensions in the Middle East from the end of February 2026.
Thaioil said its normal operations require crude oil to be procured around one to two months before refinery production. As a result, crude costs recognised in the first quarter remained relatively low under the applicable accounting method, while the full impact of price volatility caused by market tensions had not yet been reflected in the quarter’s results.
However, Pongpun pointed out that the stock gains were temporary and could reverse into losses if oil prices fall as geopolitical tensions ease. The company’s first-quarter performance was also supported by a 2.43-billion-baht gain from bond repurchases.
“Thaioil recorded other costs amounting to 6.62 billion baht. After deducting stock gains, gains from bond repurchases and these expenses, Thaioil Group’s net operating profit would stand at 6.92 billion baht, including refinery operating profit of 4.13 billion baht, or 0.9 baht per litre,” he said.
Q2 outlook clouded by stock loss and liquidity risks
Pongpun said Thaioil’s performance outlook for the second quarter remained uncertain and could move in the opposite direction from the first quarter.
Thaioil identified several key risk factors from the second quarter onwards:
- Risk of stock losses
Thaioil procured crude oil in advance to maintain maximum refinery utilisation during the peak period of conflict between March and April 2026, when crude prices were highly volatile and elevated. If geopolitical tensions ease and crude prices decline, this could lead to future stock losses.
- Risk of financial liquidity
Thaioil said it required an additional 18 billion baht in working capital to support higher crude oil procurement costs. Its cash flow was also reduced by 2.8 billion baht after diesel ex-refinery prices were cut by 2-5 baht per litre between April 9 and May 19.
Delayed reimbursements from the Oil Fuel Fund, amounting to 10.31 billion baht as of May 5, could further weaken liquidity.
As a result, Thaioil’s liquidity is expected to decline by 31 billion baht, excluding additional financing costs and higher interest expenses estimated at about 900 million baht.
The company stressed that these additional burdens were temporary and were not being passed on to consumers, as the measures were intended to support Thailand’s national energy security.
- Risk of domestic demand volatility
Thaioil warned that domestic demand remained volatile, while limitations on refined oil exports during periods of high prices had caused opportunity losses. Export product distribution has been deferred, while prices are likely to decline.
The company has maintained high refinery utilisation to support Thailand’s energy security, but rising refined oil inventories may force a near-term cut in utilisation to maintain safety and keep inventories at an appropriate level.
Meanwhile, urgent crude procurement during the height of geopolitical tensions was necessary to ensure that refinery operations could continue at maximum capacity. As a result, some excess crude oil inventories may have to be sold at market prices that could be below procurement costs, potentially resulting in losses.
Turning to African crude instead of Middle Eastern oil
Thaioil is adjusting its crude oil import sources by relying more on supplies from Africa and the Americas, in order to reduce dependence on Middle Eastern oil and maintain the stability of Thailand’s domestic energy supply.
Pongpun explained that in April and May, the company increased crude oil imports from Africa to 39%, compared with almost no imports previously. Meanwhile, the share of imports from the Middle East fell to just 35%, down from as high as 91%. Imports from North and South America also rose to around 18%.
Sourcing oil from new regions has exposed the company to entirely different transport risks, while the refinery also needs to adjust its processes to accommodate these new types of crude, he noted.
The move reflects a wider trend across Asia, where refineries are seeking alternative energy sources after conflict in the Middle East disrupted shipping through the Strait of Hormuz. Tensions escalated again as oil prices surged after US President Donald Trump rejected Iran’s proposal to end the conflict, raising concerns that disruption to key transport routes could continue.
Thaioil is currently maintaining production at a high level of around 300,000 barrels per day, above its official capacity of 275,000 barrels per day, to meet domestic demand.
However, weaker fuel consumption and export restrictions have led to a surplus of diesel and jet fuel inventories, putting pressure on storage space and margins. This has prompted the company to negotiate with the government for an easing of export restrictions to help clear the surplus.
Thaioil vows to maintain energy security
Thaioil reaffirmed that comprehensive supply chain management remained a core pillar of national energy security. The company aims to mitigate the impact on all stakeholders while ensuring uninterrupted oil procurement and operations despite elevated crude prices and higher procurement costs.
The impact is expected to become clearer in upcoming quarterly reviews. Continued uncertainty is likely to affect Thaioil’s operating performance throughout the second quarter and the second half of the year.
Future challenges will depend largely on global oil price movements and supply-demand dynamics. If geopolitical tensions ease and oil prices decline, Thaioil Group may face further pressure on operations and liquidity.
Thaioil reiterated its commitment to maintaining Thailand’s energy security and stability through transparent operations under strong corporate governance principles. The company will continue strengthening its risk management capabilities to navigate future volatility while maintaining an appropriate balance among all stakeholders, including shareholders.
