Crude Oil May Top US$170 per Barrel If Further Sanctions against Russia Impose

Thailand, like the rest of the world, is now facing an unstoppable rise in energy prices as a result of Russia’s invasion of Ukraine, which is unlikely to end anytime soon.

Gasohol 95, the most commonly used type of fuel in Thailand, has had 18 price increases since the beginning of the year.

Currently, the government has yet to consider any measures to cope with rising gasoline and gasohol prices, unlike it has handled with diesel, for which the government provides subsidies through the Fuel Fund to keep the price below 30 baht per liter.

From January till March 10, 2022, the price of gasoline 95 climbed by THB8.4 per liter, while the price of diesel B7 and B20 jumped by THB1.5 per liter, despite the government’s price cap of THB30 per liter.


KGI Securities (Thailand) said that although the conflict between Russia and Ukraine began to show some signs of improvement after the Ukrainian president commented that he would not join NATO, there have been no signs that the United States and Western European countries will drop sanctions against Russia, especially given US oil and gas interests. 

If further sanctions are imposed, Russia could retaliate by shutting down gas and oil pipelines to Europe, pushing crude oil prices to US$300 per barrel (the worst case scenario). This would cause hyperinflation, Thai inflation would be expected to rise at least 28% YoY (calculated by oil price alone) and the Thai economy would shrink significantly by at least 5%. 

Domestic oil consumption has increased since late 2021 after the government relaxed measures to curb the spread of COVID19. Daily average diesel and gasohol consumption rose to 63.13 million liters per day and 28.37 million liters per day, respectively, in 2021. If the Dubai crude oil price reaches US$300 barrel immediately and given a steady USD/THB at 33.10 through year end, then diesel would go up to THB78 per liter (if there are no further government subsidies) and gasohol would reach THB94 per liter. Every one baht depreciation will result in domestic oil price increasing by THB1.13 per liter and every US$10 increase in crude oil price will increase it by THB3.08 per liter.