A stock analyst at Tisco Securities said an oil price war has started after Saudi Arabia cut Arab Light’s official selling price, causing the original premium oil to be delivered in April at $2.9 less per barrel, a 2.9 per cent discount over March.

“Also, Saudi Arabia warned it would increase production capacity by the next month to 10 million barrels per day,” the stock analyst said.

The analyst expected that Saudi Arabia’s move would affect petroleum stocks, especially PTTEP and PTTCG.

“In contrast, oil refineries would benefit from reduced operation costs, but naphtha refinery would not benefit as much as others because of the decline in demand due to the Covid-19 outbreak,” the stock analyst said.

“The declining oil price, which fell by $10 per barrel, will cause a 21 per cent drop in earnings in 2020, or 14 per cent if stock losses are excluded.”

The analyst explained that the current PTTEP stock price at Bt106.5 accounted for Brent’s crude oil price at $55.

“If the crude price is $40 per barrel, the net asset value of PTTEP and PTT will be at Bt70 and Bt34, respectively,” the stock analyst said.

The analyst recommended investors to buy SPRC stock with an appropriate value at Bt8.80 per share.

“Although the company’s operation was worse than the market expectation, its performance will return to the upside in 2020,” the stock analyst added. “This stock has risks including volatile crude oil prices, fluctuation in refinery and chemical stocks, and production problems.”