BANGKOK, THAILAND – Thailand felt the full force of the Middle East conflict as the Strait of Hormuz closed, oil surged above $120 a barrel and its fragile economy came under sudden strain.
Thailand’s oil dependence exposed
Thailand had almost no domestic oil and depended on imports for 85 to 90 percent of its crude. Around half of those shipments had previously passed through the Strait of Hormuz, which had been closed since 2 March 2026 by the IRGC, Iran’s Revolutionary Guard. With the world’s key oil chokepoint blocked, Thailand faced a race against time, as national reserves were expected to last only 60 to 61 days without Middle East supplies, compared with Japan’s 254.
The oil price climbed from 60 dollars per barrel in early February to 117.58 dollars on 9 March, an 80 percent increase in five weeks. Every cent of that rise was passed on to Thai consumers: every ten-dollar increase per barrel meant two baht more per litre of diesel. The government froze the diesel price at 30 baht, and the national Oil Fund was paying 1.2 billion baht in subsidies per day.
At the beginning of March, that fund still held 2.46 billion baht. At the current burn rate, it was expected to last for only about another month. The shock did not create Thailand’s weaknesses, but it made them immediately visible.
From Gaza attacks to regional war
The war now hitting Thai workers and the economy had not begun on 28 February 2026. It started on 7 October 2023, when Hamas fighters attacked Israeli settlements, killed 1,195 people and abducted 251 as hostages, including 31 Thai farm workers, the largest foreign hostage group.
Since then, the conflict escalated in waves. Iran and Israel exchanged direct fire for the first time in April 2024. Israel killed Hezbollah leader Hassan Nasrallah in September 2024 in an air strike on his bunker and destroyed parts of Iran’s air defence, before a brief ceasefire slowed the fighting. After Donald Trump returned to the White House in January 2025, an ultimatum demanded that Iran completely abandon its nuclear programme or face US intervention.
On 13 June 2025, Israel launched “Operation Rising Lion” with more than 200 fighter jets against over 100 targets in Iran, including nuclear facilities. Iran responded with 550 rockets and 1,000 drones. On 22 June, the United States intervened with “Operation Midnight Hammer”, dropping twelve mega bunker-busting bombs on Iranian nuclear sites, and a ceasefire followed on 24 June, ending the so‑called “Twelve-Day War”.
It did not last. In December 2025, Iran saw its largest protests since the Islamic Revolution, and security forces opened fire, leaving hundreds, possibly thousands, dead. On 28 February 2026, the US and Israel jointly struck Tehran, Isfahan, Qom and other cities, killing Ayatollah Ali Khamenei. Iran answered with “Operation True Promise IV” against Israel and US bases in nine countries, and the war had continued since then.
Thai workers at risk across the region
The figures that worried Bangkok were stark: 65,000 Thais worked in Israel and 110,000 in the wider Middle East. Some 250 Thais had been in Iran when the latest round of bombings began.
The reason so many had gone was economic. Farm work in Israel paid five to ten times more than comparable jobs in Thailand. After the Hamas attack in 2023, when 46 Thais were killed and 31 abducted, the number of Thai workers in Israel still climbed above 38,000, because many saw no alternative. By January 2025, the total had already passed 65,000.
Since 28 February, the Thai embassy in Tehran had organised land corridors to Turkey. A group of 62 Thais left on 7 March, followed by 69 more on 10 March, while 14 were airlifted out of Iraq. So far, 351 people had returned safely.
In case of a major escalation around Israel, Bangkok was preparing evacuation plans for up to 77,000 citizens. The human cost of the conflict for Thai families, many dependent on remittances, remained difficult to calculate.
Trade routes collapse and markets reel
Thailand’s problems extended far beyond the price of oil. In the first week of March 2026, shipping traffic through the Strait of Hormuz fell by 95 percent. Major lines including Maersk, CMA CGM, Hapag-Lloyd and MSC halted sailings, while war-risk surcharges jumped by 400 to 500 percent.
The cost of sending a 40‑foot container to Europe rose to 7,000 dollars, up from 3,500 dollars before the crisis. According to the Thai exporters’ association, goods worth 32 billion baht were stuck in transit ports. The damage from trade disruptions was estimated at 33.3 billion baht per month.
In 2025, Thailand exported goods worth 12.5 billion dollars to the Middle East, accounting for just under four percent of its total exports. As routes snarled and costs soared, that business faced mounting uncertainty.
The baht fell from 30.84 to 32.15 per US dollar within a week, the sharpest drop among Asian currencies. The Bangkok stock exchange lost eight percent in a single session on 4 March, its worst fall since the Covid‑19 crash of March 2020.
Central bank under pressure as forecasts cut
The Bank of Thailand had already cut its key interest rate six times since October 2024, bringing it down to one percent. Even before the Hormuz shock, growth was under pressure, and the latest turmoil forced economists to reassess the outlook.
Growth forecasts were lowered from 2.0 percent to a range of 1.3 to 1.6 percent. If the oil price stayed above 115 dollars per barrel, inflation – which had been negative for ten consecutive months – could climb to over four percent.
The combination of higher energy costs, weaker exports and a sliding currency raised the risk that a difficult quarter could tip into a broader economic crisis. With its Oil Fund designed for a short‑term cushion rather than a protracted war, Thailand’s policy options looked increasingly constrained.
Neutral rhetoric, conflicting interests
Officially, Thailand maintained a stance of neutrality. Prime Minister Anutin Charnvirakul called for “restraint by all sides” and respect for “international law”. Bangkok did not condemn any of the warring parties and avoided naming aggressors.
The explanation lay in a complex web of interests. The United States was Thailand’s defence partner, while Iran had acted as a mediator during Thai hostage releases in 2023 and 2024. A trade agreement with Tehran signed in February 2025 had increased bilateral trade by 25 percent, giving Bangkok incentives to keep relations on both sides of the conflict.
The Brookings Institution placed Thailand in a camp of “cautious balancing”, alongside the Philippines. That contrasted with Malaysia and Brunei, which openly condemned US‑Israeli attacks, and Indonesia, which offered to mediate.
On 4 March, ASEAN issued a five‑line statement calling for an immediate ceasefire and describing the escalation as “particularly regrettable”. The text stated that the conflict had been “triggered by Israel and the USA”, one of the strongest formulations the regional bloc had ever used.
Old weaknesses meet a new shock
Thailand had not been stable even before 28 February 2026. The six consecutive rate cuts underscored persistent economic fragility, while growth remained subdued. The Oil Fund had reserves for roughly a month of heavy subsidisation, not for a drawn‑out international crisis.
The Middle East war had not created Thailand’s structural problems. It had simply brought them into sharp focus. How long the Strait of Hormuz would remain closed, and whether emergency oil purchases from West Africa, the United States and Malaysia arrived in time, would determine whether Thailand endured a tough quarter or slid into a full‑blown crisis.