Holding the Line: How Thailand Is Shielding Households from the Middle East Energy Shock

 

 

With Middle East tensions pushing oil and gas prices to multi-year highs, the government has activated a tiered emergency plan — backed by Cabinet-level directives and over 90 days of national reserves — to protect household budgets and keep the economy moving.

 

 

The escalating conflict between Iran, Israel, and the United States has severely disrupted shipping through the Strait of Hormuz — the world’s most critical oil transit chokepoint — sending energy markets into a sharp upswing.

 

LNG prices in Asia surged to a three-year high of 25.40 US dollars per million BTU on 4 March, while Brent crude climbed above 81 dollars per barrel.

 

For Thailand, the stakes are considerable. The government’s response has been immediate, structured, and — as of 4 March — elevated to the highest levels of government.

 

 

 

Cabinet Convenes Emergency Assessment

On 4 March 2026, Deputy Prime Minister and Finance Minister Ekniti Nitithanpraphas chaired an emergency meeting to assess the impact of the Middle East conflict on Thailand’s energy security. The meeting issued three clear directives to the Ministry of Energy.

 

First, the Ministry was instructed to urgently identify new import sources from unaffected regions, with a full report to the Prime Minister required within one week.

 

Second, it was directed to work alongside the Ministry of Finance to develop measures to contain domestic energy prices — including tax instruments if necessary — and to prepare other stabilisation mechanisms that can be deployed swiftly should the situation persist.

 

 

Third, the Ministry was tasked with coordinating with the Energy Regulatory Commission to secure additional natural gas from alternative sources while also managing the fuel mix for electricity generation appropriately — including exploring a new supply contract with neighbouring Malaysia.

 

 

 

On electricity generation specifically, the government is moving to accelerate natural gas production from the Gulf of Thailand, the Myanmar gas pipeline, and the Thai-Malaysia Joint Development Area (JDA), with a proposal to be submitted to Cabinet shortly.

 

“The government is ready to intervene immediately should prices or market margins show any abnormal movement,” Ministry of Energy stated.
 

 

 

 

90 Days of Reserves: Putting the Numbers in Context

Deputy Prime Minister and Transport Minister Phiphat Ratchakitprakarn moved to reassure the public on supply security, clarifying a figure that had caused some concern. Thailand currently holds strategic reserves sufficient for more than 90 days — not the 60-day figure cited earlier, which referred only to the scenario in which all Middle Eastern imports were completely cut off.

 

The fuller picture is that only around 50 per cent of Thailand’s oil imports actually transit the Strait of Hormuz. When supplies from other global sources are factored in, the country’s total reserve position comfortably exceeds 90 days. There is, officials confirmed, no shortage at present.
 

 

 

 

 

Capping Diesel: The Oil Fund in Action

The government’s principal price management tool is the Oil Fuel Fund, currently carrying a net balance of 2,459 million baht. The Fund is subsidising diesel by 3.51 baht per litre, keeping the retail price within the declared ceiling of 30 baht — directly limiting cost pass-through to transport, food prices, and broader inflation.

 

Energy Minister Auttapol Rerkpiboon has directed all agencies to monitor global crude benchmarks, Singapore refined product prices, and retail margins in real time. Officials assess the Fund can sustain the 30-baht ceiling for at least one month at current world diesel prices of around 115 dollars per barrel, without significantly straining its finances.

 

If the ceiling becomes unsustainable, the government will implement an “exit strategy”: phased increases of 50 satang to one baht at a time, moving from 30 to 33 then 35 baht per litre, to ease the psychological and economic impact on consumers.

 

 

 

Tax Levers and Worst-Case Scenarios

Should global crude breach 120 to 130 dollars per barrel, the government will pursue excise duty reductions in coordination with the Ministry of Finance — a tool used during the Russia-Ukraine crisis, when diesel excise was cut by one to five baht per litre at a total fiscal cost of 100 billion baht. In a worst-case scenario of 150 to 170 dollars per barrel, excise cuts and Oil Fund support would be deployed simultaneously.

 

 

 

LPG and Electricity: Pressure Points Ahead

On LPG, the government has committed to holding prices stable through the end of March despite the Fund’s LPG sub-account running a deficit of more than 37,854 million baht. The path beyond March remains under review.

 

Electricity tariffs present a further challenge. The Energy Regulatory Commission is due to announce rates for May to August 2026 before the end of March. LNG spot prices have already moved from around 10 to between 14 and 15 dollars per million BTU, and that difference will be incorporated into future tariff calculations. One option available to regulators is drawing on excess returns held by the three state electricity utilities — estimated at tens of billions of baht at the end of 2025 — to help contain the next tariff round.

 

 

 

Outlook

The government acknowledges the crisis may be prolonged and has not ruled out oil prices reaching 150 to 170 dollars per barrel if the conflict expands. With over 90 days of national reserves, a solvent Oil Fund, Cabinet-level coordination now in place, and active supply diversification under way, Thailand is better positioned than the headline price movements alone might suggest. Thais have also been asked to conserve energy where possible as the country navigates what may be a testing period ahead.
 

 

 

KEY FIGURES AT A GLANCE

Source: Ministry of Energy; Ministry of Finance; Energy Regulatory Commissin. Figures as at 3–4 March 2026.

 

Source: thailand.go.th