Thai refiners explain why a rising GRM does not equal net profit
Thai refiners say rising market GRM does not reflect actual earnings, as operators face hidden costs and keep producing to secure domestic fuel supply
On March 13, 2026, the Petroleum Refining Industry Club under the Federation of Thai Industries issued a statement aimed at creating a better understanding of pricing mechanisms and the real costs faced by the refining business.
1. Refining margin (Market GRM) is not the same as net profit
The group said that the refining margin, or Market GRM, cited in news reports as having risen from about 2 baht per litre to roughly 6 baht per litre, is only an indicator of the price spread in global oil markets and does not represent net profit.
The group said the headline refining margin does not take into account a number of major costs that refineries must bear, including crude oil premiums, freight charges and insurance costs, which have now risen by around 3-6 baht per litre. It added that operating expenses, gains or losses from oil inventories, and gains or losses from price risk management are also important factors that Market GRM does not reflect, meaning the figure cannot be used as a true measure of refinery earnings.
2. Business operations under a free-market pricing mechanism
The refinery group also stressed that Thailand’s oil trade operates under a free-market pricing system. Refineries cannot determine either crude purchase prices or refined product selling prices on their own, as both are tied to global market prices and therefore fluctuate with changes in the international energy market.
In practice, refineries need to procure crude oil around one to two months in advance in order to maintain continuous production. As a result, they must bear the risk of swings in global oil prices because, at the time crude is purchased, they do not yet know what price refined fuel products will be sold for in the future.
3. Maintaining refinery operations for energy security even during periods of low refining margins
The group said refining margins are cyclical and can be highly volatile. In some periods, margins fall to very low levels and may even fail to cover operating costs. Even so, refineries still have to continue running in order to ensure that Thailand has sufficient fuel supply and does not face domestic energy shortages. The group said this remains a core responsibility in maintaining national stability.
4. The role of the Oil Fuel Fund
It also clarified the role of the Oil Fuel Fund, saying the fund plays an important role in stabilising domestic oil prices by compensating oil traders so that retail prices for consumers can be managed. The refinery group said this mechanism should not be misunderstood as a subsidy for refinery operators.
