Morgan Stanley sees Thai refiners boosting dividends sharply

Investing.com -- Morgan Stanley said Thai refiners have increased dividends by two times and expects them to rise three times in 2026 as companies distribute excess profits after reducing debt levels.

Refiners have distributed only about 16% of first-half 2026 cash flows from higher earnings on average, according to the investment bank. The firm maintains a positive view on the durability of the refining cycle.

Global fuel inventories have fallen to 2022 lows. Limited capacity additions, refinery closures and high utilization rates continue to keep product markets tight, Morgan Stanley noted.

The bank expects the current upcycle to last longer than market estimates and anticipates a new, higher mid-cycle for refining margins. While quarterly margins are likely to remain volatile and normalize from current levels, annual margins are expected to stay above historical averages.

After a strong second quarter of 2026, Morgan Stanley expects medium-term gross refining margins to settle about 30% above previous mid-cycle averages. This should support stronger cash generation throughout the cycle.

With balance sheets improving and capital expenditure requirements moderating for several refiners, Morgan Stanley sees greater potential for cash flows to convert into shareholder distributions.

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