NESDC warns oil may stay high as Praipol sees US$90 a barrel in 1–2 months if wars ease

Thailand’s National Economic and Social Development Council (NESDC) has warned that prolonged high oil prices could put pressure on inflation and the current account. Energy economist Praipol Koomsup has called for broader fuel tax cuts, while suggesting prices could ease within one to two months if conflicts subside.

Danucha Pichayanan, secretary-general of the NESDC, said unresolved fighting in the Middle East and damage to oil infrastructure could keep international prices elevated for an extended period, or push them higher.

Prof Dr Praipol Koomsup, a former dean of Thammasat University’s Faculty of Economics and an independent energy analyst, offered a more optimistic conditional outlook. Prices could fall towards US$90 a barrel, or US$60–70 in the best case, if tensions in the Middle East and the Russia–Ukraine war eased, he said.

The assessments highlight different expectations for how quickly the pressure on Thailand’s energy costs might recede.

NESDC expects difficult repairs to prolong oil price pressure

Danucha said information from discussions involving leading international oil companies suggested that damage to Middle Eastern production facilities was more extensive than publicly visible accounts indicated.

Repairing the facilities would be difficult and take time because of supply-chain constraints and problems transporting replacement equipment, Danucha said. Restoring supply therefore involved more than reopening ports or resolving disruption around the Strait of Hormuz.

Danucha said persistent conflict could make elevated oil prices a “new normal”, with little sign of an early agreement to end the fighting.

The US response was also less forceful than during previous Gulf wars, in Danucha’s assessment. The NESDC chief attributed Washington’s approach partly to pressing domestic problems.

Weaker baht adds to Thailand’s oil import bill

Danucha said rising oil prices were already feeding through to Thailand’s consumer price index, although he believed headline inflation could remain within the target framework, whose upper limit is 3%.

Thailand’s official medium-term headline inflation target is a range of 1–3%, rather than a fixed target of 3%.

The current account required close monitoring because baht depreciation was making imported oil more expensive, Danucha said. Higher energy import costs could add to the pressure following a quarterly current-account deficit.

Thailand had sought to manage its exposure by diversifying oil supplies across different sources and easing the pace of urgent purchases compared with the second quarter, Danucha said.

Asked about a reported monthly increase of as much as 50% in goods imports, Danucha said the figures should be examined across a full quarter and broken down by product category. Imports of machinery and production equipment could indicate stronger investment and support future manufacturing and economic growth, he said.

On whether Thailand needed further economic stimulus, Danucha pointed to private consumption growth of around 3.7% as evidence that domestic spending remained resilient.

Danucha said higher spending per foreign visitor was also helping to offset the effect of tourist arrivals potentially falling short of the numerical target.

Exports could receive additional support from electronics component factories approaching completion, Danucha said. Construction had begun more than a year earlier, and the plants were expected to start producing for export soon.

Praipol urges excise cuts across fuel grades

Praipol said international oil prices of roughly US$100–120 a barrel were forcing Thailand to allow domestic retail prices to rise in line with market costs. Relief confined to E20 gasohol and B20 diesel would provide insufficient coverage for consumers, he argued.

Praipol proposed cutting excise duty across fuel grades, while retaining larger reductions for E20 and B20. Other fuels should receive smaller cuts so that assistance reached a broader range of motorists and businesses.

“It is not that I oppose targeted assistance, but domestic retail fuel prices have risen sharply. The government may need to sacrifice some tax revenue to broaden the relief,” Praipol said.

The Cabinet approved three-month excise tax reductions for E20 and B20 on October 27, 2026. Praipol’s proposal would extend relief to other fuel grades; it is a recommendation rather than an approved government measure.

Praipol’s lower-price scenarios depend on easing conflicts

Praipol said oil market conditions could improve within one to two months, depending on political developments in the United States and a reduction in the intensity of the Middle East and Russia–Ukraine conflicts.

The US midterm elections are scheduled for November 3, 2026. Danucha suggested that a reduction in Republican congressional seats could constrain Washington’s overseas military policies, while Praipol identified possible changes in US foreign policy after the elections as one factor that could ease Middle Eastern tensions.

Praipol also saw scope for a gradual easing of the Russia–Ukraine conflict. A reduction in fighting in both regions could help bring oil prices down towards US$90 a barrel, with US$60–70 possible under his most favourable scenario.

Praipol said a substantial fall in international prices would reduce pressure on Thailand’s retail fuel market and could remove the need for excise tax cuts to support pump prices.