Deputy Prime Minister Phiphat Ratchakitprakarn said the government’s immediate priority is to secure sufficient crude oil supplies should the war in the Middle East continue to disrupt global energy markets, reports the Bangkok Post.
Thailand has already increased its crude oil reserves from 92 days to 98 days to strengthen national energy security he said.
About half of Thailand’s crude oil imports currently come from the Persian Gulf and pass through the Strait of Hormuz, while the rest originates from sources elsewhere. The government is therefore accelerating negotiations to increase imports from other regions to offset any potential supply disruption.
Another development is the United States’ decision to lift sanctions on countries that import Russian crude for 30 days. The decision applies to oil and petroleum products currently stranded at sea, said to total about 100 million barrels or roughly a day’s worth of global consumption.
In response, the Ministry of Energy is preparing to negotiate purchases of Russian crude to supplement Thailand’s supplies and ensure domestic energy security, Mr Phiphat said.
Sarawut Kaewtathip, director-general of the Department of Energy Business, said initial discussions suggest that Russian crude could be processed by Thai refineries, and officials will coordinate with refinery operators and traders who can access Russian supplies. Any purchases would likely be benchmarked against the global Brent crude price.
The government is also reviewing fuel pricing ahead of the expiry of the diesel price freeze on Monday. Mr Phiphat said discussions will be held on adjusting diesel prices once the cap ends and increasing petrol prices in line with market mechanisms.
The cost of subsidising diesel to keep the price just below B30 a litre has reached B16 per litre, and the government’s Oil Fuel Fund is burning through more than B1 billion a day to pay for it.
If fuel prices are increased next week at the pumps, there will be an impact on transport costs and goods prices, prompting consultations with Prime Minister Anutin Charnvirakul and the Ministry of Commerce on possible measures to mitigate the impact.
Authorities are also preparing a plan to increase the biodiesel blending ratio from the current B7 level to B10, and potentially B20, as used in the past.
Mr Phiphat said some support measures for industry may involve allowing prices to partially float while requiring businesses to absorb part of the increased cost. However, the impact on consumers could be limited if sufficient funds are available through the Oil Fuel Fund to stabilise prices.
In a related development, the country’s petroleum refiners issued a statement clarifying concerns about rising refining margins.
The group said the rise in the market gross refinery margin from around two baht per litre to six baht per litre, is only an indicator of the price difference between crude oil and refined products in global markets and does not represent net profit.
Refineries must still bear additional costs, including crude oil premiums, shipping and insurance, which have risen significantly. Operating expenses, inventory gains or losses and price risk management also affect profitability.
The Petroleum Refinery Industry Group under the Federation of Thai Industries stressed that Thailand’s oil trade operates under a free-market system. Refineries cannot set crude purchase prices or retail fuel prices, both of which follow international market benchmarks.