A jump in Singapore spot diesel prices to US$178 a barrel is adding pressure to Thailand’s Oil Fuel Fund, whose deficit reached 102 billion baht, the Bangkok Post reported Thursday.
Energy Policy and Planning Office (EPPO) figures cited by the Bangkok Post put the fund’s net deficit at 102 billion baht as of Oct. 11. The fund was spending about 229 million baht a day to support domestic energy prices. Its shortfall included 60.8 billion baht for diesel and gasoline subsidies and 40.9 billion baht for liquefied petroleum gas.
The Oil Fuel Fund Office approved changes to retail prices and subsidy mechanisms. Diesel and gasohol prices then rose 0.60 baht per liter. Diesel B7 was priced at 43.54 baht per liter Wednesday, while Gasohol 95 cost 42.04 baht.
Wattanapong Kurovat, director-general of EPPO, told the Bangkok Post that tankers taking longer routes around Africa had reduced oil flows into Singapore and raised shipping costs. The newspaper also reported a larger-than-expected 3.2 million-barrel drawdown in U.S. crude inventories, adding to signs of tighter supply. It cited attacks by Iran-backed Houthi rebels in Yemen on commercial vessels and Saudi energy infrastructure as further disruptions to supply chains.
Praipol Koomsup, an economist at Thammasat University and former aide to former energy minister Norachai Akrasanee, told the Bangkok Post diesel could reach US$200 a barrel, comparable to prices during the 2022 Russia-Ukraine conflict. He said continuing conflicts in Europe and the Middle East made the timing of a market recovery uncertain.
An energy official who requested anonymity told the Bangkok Post fuel excise tax cuts would be the government’s last resort to protect consumers if oil prices kept rising toward US$200 a barrel. Government officials and oil executives warned that further borrowing for subsidies could strain Thailand’s already-indebted public finances. The official said prices might remain high into early next year, but geopolitical uncertainty and higher Northern Hemisphere winter demand clouded the outlook.
