The ongoing conflict in the Middle East has started to materially affect Thailand’s economy, largely through higher oil prices that are directly impacting domestic energy and transportation expenses.
Mr. Asadej Kongsiri, President of the Stock Exchange of Thailand (SET), noted that around half of Thailand’s oil is sourced from the Middle East, with the remainder obtained from areas such as neighboring Brunei and African countries. For liquefied natural gas, approximately 10-20% is imported from the Middle East.
Government officials, including the Minister of Energy, have indicated that Thailand is prepared for potential supply chain disruptions should geopolitical tensions persist. Despite this readiness, increased oil and energy costs pose challenges for Thai listed companies, particularly for those whose cost structures are heavily dependent on fuel and transportation.
There is additional concern that the higher global energy prices could trigger renewed inflationary pressures. This, in turn, may disrupt expectations of interest rate cuts by the U.S. Federal Reserve, potentially leading to greater volatility in the US dollar and affecting Thai exporters and importers through currency movements and cost changes.
Investors are also monitoring the risk of more sustained impacts, such as companies having to halt production or a possible escalation in foreign investor outflows.
The Thai bourse continues to monitor trading closely to uphold market stability, with no significant intervention required so far. The current stability in large-cap stock prices and maintenance of liquidity suggest that, unless the conflict intensifies, mechanisms of the Thai market remain robust in managing volatility. Listed companies are urged to provide clear, timely communication to shareholders and investors, especially when disruptions to supply chains are likely.
Market outlooks have adjusted to the possibility that oil prices will remain above $80 per barrel, instead of reverting to previous lower levels. Dr. Phacharaphot Nuntramas, President and Chief Economist of Krung Thai Bank (KTB), highlighted that persistent energy-driven inflation is now expected to last over the medium term.
As such, global central banks—including Thailand’s—are likely to exercise greater caution in adjusting interest rates. Expectations for near-term global rate cuts have faded, reflected in rising government bond yields abroad as markets predict a delay in monetary easing.
Thailand’s dependence on imported energy means that increased oil prices will filter through to the broader economy, raising transportation and production costs and thus contributing to higher consumer prices. As a result, Thailand’s headline inflation may rise, though specific forecasts remain uncertain.
The Bank of Thailand (BOT) is therefore expected to slow or postpone any rate cuts, preferring to hold the policy rate steady if inflationary pressures mount. The next Monetary Policy Committee meeting, set for April 29, 2026, is widely expected to maintain the current rate.
Dr. Yunyong Thaicharoen, Chief Economist and Sustainability Officer at SCB Economic Intelligence Center (SCB EIC), projected that Thailand’s annual inflation rate will likely average 3.2% this year, surpassing the BOT’s target band and far exceeding the earlier estimate of near-zero inflation. Initial price increases are expected in energy and logistics before moving to other categories affected by input shortages.
In terms of policy, government fuel subsidies—especially via the Oil Fuel Fund—are still in place but are constrained by Thailand’s rising public debt, which is approaching 70% of GDP.
As a result, fiscal space for further intervention is limited, and the risk to Thailand’s sovereign credit rating is increasingly noted, particularly with projected pressure on tax revenues and a higher fiscal deficit. Suggested policy measures include targeted, gradual adjustment of energy prices, rather than generalized price controls, to ease adaptation for consumers and businesses.
From a market perspective, Mr. Natapon Khamthakrue of Yuanta Securities (Thailand) explained that increasing oil prices have led to notably lower profit forecasts for Thai listed companies, particularly in sectors with high energy expenses.
Current estimates suggest every 10% rise in oil prices cuts aggregate profit by about 2.5%, prompting a reduction in forecasted market earnings per share from 90 baht to 87 baht this year. The target for the Thai stock index has also been scaled back to 1,440 points amid ongoing cost and price volatility.
On energy price management, market analysts stressed the importance of letting domestic oil prices follow international price movements to avoid heavier budgetary burdens from prolonged subsidies.
Artificially maintaining low prices would entail higher government spending and potential risks to fiscal discipline, possibly affecting Thailand’s creditworthiness. Allowing market-driven prices could encourage improved energy efficiency among businesses and consumers, which may help manage long-term import demands for energy.
