Since hostilities erupted on Feb 28, the confrontation has moved beyond the initial wave of air strikes. Recent attacks on Iran’s ballistic missile production facilities and border outposts suggest the possibility of further escalation, including potential ground operations, reports the Bangkok Post.
Analysts warn the intensifying conflict is increasing the risk that critical oil infrastructure across the Middle East could become targets. Ports, oil tankers, refineries, gas-processing facilities and storage sites are considered particularly vulnerable. In an extreme scenario, even desalination plants -- a crucial source of freshwater for Gulf states -- could be affected.
Although the caretaker government and possibly the incoming administration has sought to reassure the public that Thailand holds sufficient fuel reserves to withstand prolonged tensions in the Middle East for more than 90 days, authorities are exploring ways to make fuel imports more flexible should disruptions intensify. Concerns remain over how long the state can sustain energy subsidies.
Meanwhile, businesses face mounting pressure as higher energy costs threaten to drive up production expenses and deepen the energy crisis.
TRADE DISRUPTIONS
Dhanakorn Kasetrsuwan, chairman of the Thai National Shippers’ Council (TNSC), said tensions in the Middle East remain highly uncertain and could drag on for several months if negotiations fail to materialise.
In a worst-case scenario, if oil prices rise to US$100-120 per barrel, costs for energy, production, maritime freight and shipping insurance would increase, while exchange rates could become more volatile. The surge in costs would place additional pressure on Thai exporters, he said.
Freight rates on several major shipping routes have already increased by 10-30%, particularly on routes linking Asia with the Middle East, Europe, North Africa and the Mediterranean, noted Mr Dhanakorn.
Many shipping lines have imposed emergency conflict surcharges of $2,000-4,000 per container and war-risk surcharges of about $1,500-3,500 per container, while insurance premiums have also risen.
"It may take two to three months for freight rates to return to normal levels, depending on whether tensions ease," he said.
Mr Dhanakorn identified three export categories most affected by the war: agricultural and food products, furniture and home décor items, and low-priced industrial goods.
"For these products, logistics costs account for a significant portion of total expenses, so rising freight rates can quickly erode their competitiveness," he said.
To address these challenges in the short term, the TNSC urged the government to manage energy costs to ease pressure on the production and logistics sectors.
Authorities should also introduce support measures to reduce transport and logistics expenses for exporters, while providing working capital loans to improve business liquidity, noted the council.
The government should also accelerate negotiations on free trade agreements to expand market access and strengthen Thailand’s competitiveness in global markets, said Mr Dhanakorn.
RICE EXPORTS PRESSURED
The conflict has also disrupted Thailand’s rice trade. Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said the conflict in the Middle East is creating fresh challenges for the industry, particularly following the suspension of rice shipments to Iraq, Thailand’s largest export market.
Typically Iraq imports 70,000-80,000 tonnes of Thai rice monthly, but shipments have halted.
"Rice that was already loaded onto vessels must be returned to storage, as ships cannot travel to the Middle East and no new orders are coming from customers in the region," he said.
India, which is also unable to export rice to the Middle East, is seeking alternative markets in Asia, including Malaysia and China, both of which are key destinations for Thai rice.
Thai rice already faces a disadvantage in price competition. India’s 5% white rice is currently around $340 per tonne, compared with $365-370 per tonne for Thai 5% white rice, according to Mr Chookiat.
"If the conflict drags on, export prospects for Thai rice will become even gloomier," he said.
"Logistics disruptions have left other export markets quiet, with buyers adopting a wait-and-see approach."
Mr Chookiat urged the government to cap energy prices to help reduce business costs amid the Middle East tensions.
He also expressed hope the new administration will introduce effective policies to stimulate the economy and support businesses, particularly measures to prevent sharp fluctuations in the baht.
"The new administration appears more stable than previous governments. If it can govern effectively over a longer period, we may see more productive policies implemented," said Mr Chookiat.