BANGKOK, THAILAND – Thailand moved to shield itself from potential global oil supply disruptions and signalled possible purchases of Russian crude, while warning of higher diesel prices from 17 March.
More reserves amid Middle East risk
Deputy Prime Minister and Transport Minister Phiphat Ratchakitprakarn identified securing sufficient crude oil as an immediate priority in case the war in the Middle East further unsettled energy markets.
According to Phiphat, Thailand had already increased its strategic crude reserves from 92 to 98 days to strengthen national energy security.
Reliance on the Strait of Hormuz
Phiphat said that around half of Thailand’s crude oil imports came from the Persian Gulf and passed through the Strait of Hormuz.
The government therefore accelerated talks to source more crude from other regions to reduce the risk of shortages if that route was disrupted.
US policy shift opens door to Russian crude
Another factor, according to Phiphat, was the decision by the United States to lift its boycott of Russian crude oil exports.
The Energy Ministry was preparing negotiations to consider Russian crude as an additional supply source in order to safeguard domestic energy availability.
Energy Ministry reviews import routes and refineries
Sarawut Kaewtathip, director-general of the Department of Energy Business, said the government had instructed the Energy Ministry to examine options for importing Russian oil.
Initial talks suggested that Russian crude could be processed in Thai refineries, with officials coordinating with refinery operators and traders and prices expected to follow the Brent benchmark.
Diesel cap to end as government flags price changes
In parallel, the government reviewed fuel prices ahead of the expiry of the diesel stabilisation measure on 17 March, Phiphat said.
After the cap ended, diesel prices would be adjusted and gasoline prices would move more closely with market mechanisms, potentially affecting transport costs and goods prices.
Talks with premier and Commerce Ministry – biodiesel as a lever
Because of possible knock-on effects, Phiphat announced consultations with Prime Minister Anutin Charnvirakul and the Commerce Ministry on measures to soften the impact.
Authorities were also preparing to raise the biodiesel blend from B7 to B10 and, if needed, to reintroduce B20, which had been used previously.
Oil fund and partial pass-through – who pays more?
Part of the support for industry could, according to Phiphat, involve letting prices “float” partially, while companies would have to shoulder some of the additional costs themselves.
For consumers, the impact could remain limited if there were sufficient funds in the Oil Fuel Fund to cushion price volatility.
Refineries push back against margin criticism
Meanwhile, the refinery group within the Federation of Thai Industries stated in a declaration that reports on rising refinery margins had been misunderstood.
The cited “Market Gross Refinery Margin”, which reportedly rose from around two baht per litre to about six baht per litre, only reflected the price difference between crude oil and products on the world market and was not the same as net profit.
Why global market prices are not the same as profit
The refineries pointed to additional burdens such as crude premiums, transport, insurance and higher costs along the supply chain.
They added that operating expenses, inventory gains or losses and price-risk management also affected actual profitability, while crude procurement and retail prices in a free market were tied to international benchmarks and could not be set arbitrarily.