FTI chief warns wider Middle East conflict could hit Thai economy hard, raises Strait of Hormuz risks
Federation of Thai Industries president Kriengkrai Thiennukul warns escalation in the Middle East could disrupt energy imports—70-80% of Thailand’s crude comes from the region—pushing up oil, transport and production costs and forcing contingency planning if the Strait of Hormuz is affected.
Kriengkrai Thiennukul, president of the Federation of Thai Industries (FTI), said on Monday that at the prime minister-chaired meeting assessing the fighting in the Middle East, the government would discuss measures to deal with the unfolding situation. He said there is a risk the crisis could lead to the Strait of Hormuz being closed, which would affect large volumes of energy imports. Thailand therefore needs contingency plans to manage the impact, particularly the risk of an oil shortage.
“At present, we import about 1 million barrels of oil per day. Around 70-80% of those imports come from the Middle East—roughly 700,000-800,000 barrels per day. The question is how we can address this to avoid shortages, and how high prices could rise. It would affect transport costs, production costs and various goods, so what contingency plans should we have? That is what we will discuss initially, because right now we still cannot say whether the situation will be prolonged or short-lived. We will need to monitor it closely,” he said.
Kriengkrai said the industrial sector is concerned about impacts on energy-intensive industries, which would drive costs higher. However, he said it is still too early to quantify. In the short term, he said the psychological impact has been limited so far—when markets opened today, prices had not surged significantly. Oil prices rose by only around US$5-6 per barrel, with North Sea Brent edging up slightly, while other parts of the world have not yet seen major effects.
He added that the exchange rate has also been affected to some extent. The US dollar had strengthened earlier, but has since eased. Gold prices, he said, could trend higher if the situation continues to escalate. “It is now up to around US$5,300-5,400,” he said, adding that the private sector is watching developments closely.
“We hope it ends as soon as possible, but it is impossible to predict because this is beyond what we can control. If it ends quickly, the impact should not be too severe. But if it escalates—there are now reports of further Israeli attacks near Lebanon, and we do not know whether the Houthi forces around the Strait of Hormuz have fired missiles at oil tankers there—then it is unclear whether there will be an operation to suppress those forces. We cannot say yet, and we need contingency measures in place first,” he added.
