Thailand holds steady oil buffer as Middle East tensions continue to unsettle markets

Thailand has reportedly maintained oil reserves sufficient for 109 days of consumption, even as renewed tensions in the Middle East add a fresh layer of unease to global energy markets and contribute to concerns over supply disruptions.

According to the Thai Energy Ministry’s latest assessment, diesel production in the country continues to exceed domestic demand with daily output reaching 83.37mn litres, compared with a nationwide demand of 68.69mn litres. However, the broader outlook from Bangkok remains uncertain as geopolitical risks add to worries that key transit routes could be cut at any time, The Nation reports.

As a temporary two-week ceasefire between the US and Iran holds – barely – oil prices were initially pushed lower on expectations that shipping through the Strait of Hormuz would normalise. That optimism has since faded though as Iran’s powerful Islamic Revolutionary Guard Corps (IRGC) has announced a renewed suspension of shipping through the Strait on the back of Israeli military actions in Lebanon. This immediately added to tensions in and around the Strait, leaving between roughly 1,600 oil tankers and cargo vessels and an estimated 20,000 seamen stranded across the Persian Gulf and the Gulf of Oman.

Thailand is particularly exposed to such developments due to its reliance on Middle Eastern crude, which accounts for an estimated 52% of all energy imports. As a result, domestic oil pricing is closely linked to regional benchmarks, notably Dubai crude, which, in recent trading has diverged significantly from western benchmarks including West Texas Intermediate and Brent.

In response, the Energy Ministry in Bangkok is now reviewing data submitted by refinery operators around the country with a view to adjusting Thailand’s domestic pricing structure with the aim of ensuring that prices more accurately reflect underlying costs, while at the same time improve transparency in Thailand’s energy system.

Despite these pressures, Thailand’s current oil stockpile remains robust according to all reports. As of the second week in April, sources point to reserves at a level sufficient to meet demand for 109 days. Of the total, 25 days comprises mandatory reserves, with 22 days of commercial stockpiles, 31 days of oil currently in transit albeit not in-country – and the remaining 31 days secured for delivery but not yet in transit.