- Thailand oil prices crisis intensifies as global Iran conflict drives up fuel costs and public concern.
- Government rejects profiteering claims, clarifying that refinery margins are not actual profits in the Thailand oil prices crisis.
- Subsidies and a 120 billion baht fuel fund aim to shield vulnerable groups from the Thailand oil prices crisis.
- Rising shipping, insurance, and global benchmark costs continue to shape the Thailand oil prices crisis and domestic pricing.
Bangkok — Thailand’s authorities have firmly rejected allegations that domestic oil refineries are profiting from the ongoing conflict in the Middle East, stressing that the government has been actively taking measures to shield the public from the economic fallout of the war.
The Petroleum and Energy Institute of Thailand (PTIT) clarified that a recent surge in gross refinery margins (GRM) does not equate to net profits for oil companies, addressing concerns that rising global oil prices might be exploited for local gain. GRM, which measures the difference between crude oil prices and refined oil, jumped to 6.31 baht per litre between March 1 and 26, up from an average of 2.09–2.14 baht per litre in January and February.
“GRM is not the net profit for oil refineries,” said Kurujit Nakornthap, executive director of PTIT. He explained that GRM only reflects the refining process costs, not the overall profit margin, and that other “implicit costs” have surged significantly amid the Israel-US war on Iran. These include higher insurance premiums and shipping costs caused by restricted access through the Strait of Hormuz. “Once these costs, which we estimate between 3–6 baht per litre, are considered, the apparent margin is absorbed into the final retail price,” he added.
Thailand’s method of pricing refined oil, based on Singapore’s reference prices, also contributes to fluctuations in domestic rates. Singapore serves as a major hub for both physical and futures oil markets in Asia. If local ex-refinery prices fall below Singapore’s, traders may export Thai oil to gain higher returns; conversely, if prices are higher, imported oil from Singapore enters the market to maintain competition.
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Despite the price hike of 6 baht per litre announced for Thursday, the government emphasized that measures are in place to protect consumers. Deputy Prime Minister Phiphat Ratchakitprakarn, in his capacity as chairman of the Joint Management and Monitoring Centre for the Situation in the Middle East, announced plans to borrow 120 billion baht to reinforce the Oil Fuel Fund. This fund continues to subsidize fuel prices, particularly for vulnerable groups, ensuring that low-income households face minimal hardship amid global price surges.
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Thailand’s proactive stance comes in the context of rising global oil volatility. Historical precedent shows that during past conflicts in the Middle East, Thai authorities have often stepped in to prevent domestic exploitation. In 2019, for example, when tensions between the U.S. and Iran escalated, the government temporarily capped retail fuel prices and provided targeted subsidies to cushion the public against sudden spikes. Officials emphasize that similar strategies are now in place, reflecting a commitment to public welfare rather than commercial interests.
Economists highlight that the current situation differs from past crises. While global crude oil prices have soared due to geopolitical tensions, local refinery margins alone cannot be interpreted as profit-making. “It’s essential to separate gross refinery margins from net earnings,” said Somchai Phongpaichit, a Bangkok-based energy analyst. “Thailand’s policy framework ensures that short-term market fluctuations do not translate into undue profit for oil companies at the expense of citizens.”
The government’s communication strategy has also included public awareness campaigns, urging citizens to prepare for incremental price adjustments while reassuring them of available subsidies. Fuel retailers have been instructed to clearly display the breakdown of costs, helping consumers understand that higher prices largely reflect global market conditions and logistical challenges, not profiteering.
As the Middle East conflict continues to disrupt global supply chains, Thailand maintains its focus on resilience and public protection. Authorities have signaled that further measures—including temporary tax relief on refined oil and expanded social support—remain on the table should market volatility intensify.
By combining transparent pricing mechanisms, strategic subsidies, and continuous monitoring of global oil markets, Thailand aims to weather the effects of the Iran war without transferring undue financial burden to its population, reinforcing the government’s position that safeguarding citizens remains the priority.