Domestic oil prices in Thailand are expected to remain elevated until the final quarter of this year, even though global crude benchmarks have eased and the US is set to sign a peace deal with Iran this Friday to end nearly four months of conflict in the Middle East.
An Energy Ministry official, speaking on condition of anonymity, warned that Thai motorists will continue to face high costs at the pump despite international developments that could stabilise oil markets.
Global crude prices have slipped, with Brent crude standing at US$90 on June 12, down from highs of $102–$116 in early March, according to Capital.com, a fintech and trading platform.
Yet Thai retail prices have not followed suit. On June 15, diesel was sold at 39.80 baht per litre and gasohol 95 at 42.30 baht, only slightly lower than a month earlier.
The energy official explained that several factors are keeping domestic prices high.
Thailand imports most of its crude oil, meaning foreign exchange rates directly affect costs.
More critically, recent military attacks in the Middle East have damaged oil production, storage and transportation facilities, particularly refineries and liquefied natural gas plants.
With many Asian countries lacking refining capacity, reduced supply has pushed refined oil prices higher, the official said.
Forward contracts also point to sustained pressure.
"The latest forward price for diesel for October delivery is still at $100 per barrel, indicating that prices will remain high until October," the official said.
Thailand references refined oil prices from the Singapore market, widely regarded as the most reliable regional benchmark.
Domestic prices are further shaped by the Oil Fuel Fund, which cushions consumers against volatility. The fund subsidises fuel when global prices surge and collects levies when they fall.
However, heavy spending has left the fund in a deep deficit. Losses stood at 63.7 billion baht in mid-May, narrowing to 58.4 billion baht by June 15, according to the Oil Fuel Fund Office.
The official stressed that retail prices cannot be cut immediately when global crude declines, as levies must be collected to repay debt.
Taxes also play a significant role. Excise, municipal and value-added taxes account for roughly 30% of retail prices, while refining costs make up the remaining 70%, he said.
Value-added tax is charged twice -- on wholesale and retail prices -- adding further pressure.
Contributions to the Energy Conservation Promotion Fund are also required, meaning retail prices often diverge from global crude trends, he added.
Since taxes and levies are fixed per litre, retail fuel prices do not adjust in line with global crude price movements.
