Thai refiners are poised to sharply increase dividend distributions after Morgan Stanley raised its outlook, projecting payouts to triple by 2026 amid sustained refining margin strength.
The investment bank estimates refiners will distribute only about 16% of their first-half 2026 cash flows in dividends, a figure expected to rise as earnings growth and debt reduction free up capital. Medium-term gross refining margins are forecast to stabilize roughly 30% above prior mid-cycle averages, supported by tight global fuel inventories and limited new refining capacity.
Morgan Stanley cited product market tightness driven by refinery closures, high utilization rates, and constrained capacity additions as key factors underpinning the prolonged upcycle. The current cycle is anticipated to exceed market expectations in duration, with annual margins remaining elevated despite expected quarterly volatility and normalization trends.
Dividend growth is further supported by refiners' improved balance sheets and moderating capital expenditure requirements, allowing excess profits to be returned to shareholders. The outlook reflects a shift from historical norms, where refiners previously retained larger portions of earnings for debt servicing and expansion.
