Thailand weighs decree to back oil fund amid energy crisis

Thailand is preparing a comprehensive response plan to address a potential energy crisis triggered by rising global oil prices and escalating tensions in the Middle East, including the possibility of issuing an emergency decree allowing the Finance Ministry to guarantee loans for the Oil Fuel Fund.

The move is intended to maintain price stability for fuel and gas in Thailand if crude oil prices continue to climb in the global market.

Oil prices have been rising steadily since the United States and Israel launched strikes against Iran on February 28. Analysts at Goldman Sachs estimate that global crude prices could reach $100 per barrel within the week if tensions in the region fail to ease.

A source at the Energy Ministry told Krungthep Turakij that the ministry has developed a proactive energy contingency plan, which has already been discussed within the ministry and at the National Security Council since the strikes on Iran.

The strategy is divided into three main areas: energy price management, securing additional energy supplies, and energy conservation measures.

Energy price management

The plan includes managing the prices of both oil and liquefied petroleum gas (LPG) through the Oil Fuel Fund. As of March 1, 2026, the fund’s balance stood at 2.459 billion baht in surplus, with the oil account recording a surplus of 40.313 billion baht while the LPG account remained in deficit at 37.854 billion baht.

The Energy Ministry has set a cap on diesel prices at no more than 30 baht per litre until March 17. After that date, the situation will be reassessed and the ceiling may be raised in increments of 0.50 baht per litre if necessary.

For LPG, despite the large deficit in the fund’s LPG account, the National Energy Policy Administration Committee has resolved to maintain the retail price at 423 baht per 15-kilogram cylinder until the end of March, with plans to continue supporting the price if needed.

During the Russia–Ukraine war, the Oil Fuel Fund once recorded a deficit of as much as 132.671 billion baht on November 27, 2022. If crude prices continue to rise due to the current Middle East conflict, the government may again issue an emergency decree allowing the Finance Ministry to guarantee loans for the fund, similar to the mechanism used during the previous crisis.

Securing additional energy supplies

Thailand currently imports about 50% of its oil and LNG from the Middle East. With Iran announcing restrictions on shipping through the Strait of Hormuz, energy transportation routes have become increasingly uncertain.

The Energy Ministry has instructed PTT Plc to accelerate efforts to diversify crude oil and LNG imports to reduce reliance on the Middle East. Potential alternative suppliers under discussion include the United States, West Africa and Malaysia.

At the same time, authorities are negotiating to increase natural gas production from three sources: fields in the Gulf of Thailand, Myanmar’s Yadana and Zawtika gas fields, and the Thailand–Malaysia Joint Development Area (JDA). The additional supply would be secured through flexible “swing gas” arrangements to strengthen energy security for electricity generation.

The ministry is also preparing contingency measures that could temporarily lower fuel quality specifications to allow greater flexibility in importing refined petroleum products from alternative sources during periods of tight global supply.

Officials are also considering increasing the use of domestically produced B100 biodiesel after Thailand phased out B10 diesel pumps in 2024, leaving only B7 diesel available.

In addition, Thailand may increase electricity generation from renewable sources, biomass and coal. The Electricity Generating Authority of Thailand (EGAT) is preparing to boost output from the Mae Moh coal-fired power plant.

Oil stockpile requirements for fuel traders under the Fuel Trade Act will also be raised from 1% to 1.5% from March 31 and to 3% from April 30.

Energy conservation measures

The Energy Ministry plans to present energy-saving measures to the Cabinet on March 10. These measures are based on policies previously implemented during the Russia–Ukraine war, when global oil prices surged to between $120 and $140 per barrel.

Government agencies may be required to reduce energy consumption by 20%, including electricity and fuel use. Other proposed measures include limiting air-conditioner operating hours from 8:30am to 4:30pm, setting temperatures at 25–26°C, increasing the use of LED lighting and activating automatic screen shut-off systems for office equipment.

Elevators may stop only on alternating floors, and stair use will be encouraged to reduce electricity consumption.

Transport measures will encourage more efficient vehicle use, including prioritising biofuels such as gasohol and biodiesel, maintaining vehicles properly and promoting online meetings to reduce travel.

A work-from-home policy has also been discussed at the National Security Council, though authorities are assessing the potential economic impact.

Oil fund financing and LNG supply adjustments

During the Russia–Ukraine conflict, the Oil Fuel Fund initially struggled to secure loans due to its negative financial position and the absence of government guarantees. The government later issued an emergency decree allowing the Finance Ministry to guarantee the fund’s borrowing, with a ceiling of 150 billion baht.

Between 2022 and 2023, the fund borrowed 105.333 billion baht and began repaying the principal in November 2024. Outstanding debt has since fallen to about 30 billion baht and is expected to be fully repaid by 2029 under the assumption that Dubai crude prices average $60–$70 per barrel.

Officials said such guarantees help strengthen confidence among financial institutions and enable the fund to access financing to stabilise domestic energy prices.

The Energy Regulatory Commission last week also approved the procurement of three additional spot LNG shipments for delivery between March and April after some vessels were unable to pass through the Strait of Hormuz.

EGAT has also established a war room to monitor developments around the clock, particularly LNG imports from Qatar. The authority is preparing to operate the Mae Moh coal-fired power plant at full capacity and increase electricity purchases from hydropower plants both domestically and abroad to reduce reliance on LNG.

Danucha Pichayanan, secretary-general of the National Economic and Social Development Council, said Prime Minister Anutin Charnvirakul had instructed the Energy Ministry to prepare a plan to secure additional energy sources and report progress on a weekly basis in coordination with PTT.

The ministry estimates that Thailand currently has oil reserves sufficient for about 90–95 days, including shipments from the Middle East that are already en route and supplies from alternative sources that should ensure adequate availability through April.

The prime minister has also ordered authorities to maintain the diesel price at 29.94 baht per litre for 15 days. If global oil prices remain high and the conflict persists, the government may issue an emergency decree allowing the Finance Ministry to guarantee loans for the Oil Fuel Fund, similar to measures taken during the Russia–Ukraine war.