Mid-East tensions will affect Thai energy structures and exports - trade expert

A Thai economist and international trade expert is strongly advising the country to reconsider its energy structures, amid the ongoing war in the Middle East and the consequent surge in global oil prices.

Associate Professor Dr. Aat Pisanwanich, Director of the Centre for International Trade Studies, assesses that the tensions in the Middle East are likely to intensify. This means that oil prices will remain volatile, posing risks for Thailand’s economy.

“Looking at the situation now, I believe the war (in the Middle East) will continue for a month. Now it’s week two and it’s very unlikely that the tensions will ease,” he says.

Time to rethink energy

Global oil prices have already hit 100 US dollars per barrel and are unlikely to return to pre-Iran war prices, despite the availability of emergency supplies.

Dr. Aat cited US President Donald Trump’s statement that Venezuela provided the US with 80 million barrels of crude oil last month, while the International Energy Agency (IEA) will provide them 400 million barrels, the highest volume to date, and G7 countries will provide 300-400 million barrels.

“Global oil prices may drop slightly but, down to the same level as before the US-Iran war started on February 28th, which was 67 US dollars per barrel, won’t be possible,” he opined.

Thailand’s Energy Ministry previously announced that its oil reserves would last for 95 days and that it will also source crude oil from other countries, outside the Middle East. This, Dr. Aat believes, will not be a sustainable route, as other countries are in the same boat, which will put Thailand at risk when it comes to sourcing energy.

“Other countries, like Vietnam, also want to do the same thing. Same with South Korea and India, which are (also) sourcing crude oil from other countries. Therefore, whichever way you’re going, aside from the Middle East, you will still have to compete for it.”

Most of Thailand’s crude oil imports have been from the Middle East to date, as well as from the United States.

Dr. Aat thinks that the country’s energy structure must be reconsidered, as Thailand appears to be too reliant on oil imports, making the production of its own renewable energy much more important. One particular issue he raised is biodiesel.

“The problem is that the cost of palm oil is so high in Thailand. Why is palm oil so expensive here? It’s because we have been importing too much crude oil,” he said.

Thailand is currently using B7, where the letter "B" stands for biodiesel, and the following number indicates how much of the total fuel is made from renewable sources. B7 is the lowest in the ASEAN region. Other countries, such as Malaysia, are using B20, while Indonesia is on B40, indicating their capacity to produce more biodiesel, because their main source, palm oil, is much cheaper than in Thailand.

This means, the trade expert feels, that the Thai government should have come up with a better strategy for producing its own renewable energy, so that the country can reduce its dependency on imported oil.

“If the Thai government had a concrete plan from the start, we would be able to access cheaper petrol, without being affected by global oil prices,” Dr. Aat commented.

What about exports?

The Middle East is an important export market for Thailand, according to the Commerce Ministry. The country with the highest trade volume with Thailand is the United Arab Emirates (UAE), which is its 8th largest trading partner worldwide.

The value of trade between Thailand and the UAE in 2025 was 21 billion US dollars. Other countries in the Middle East with high trade values with Thailand include Saudi Arabia, Qatar, Turkey and Oman. While Iran, which is at the centre of the current tensions, is Thailand’s 87th largest trading partner, with only 146 million US dollars of trade value.

The top exports to the Middle East are cars and car parts, worth about 4.1 billion US dollars. Gems and jewellery are also among the top exports, worth 1.1 billion US dollars, followed by air conditioners and related parts, rice and wood.

The current tensions and volatile oil prices will certainly affect Thai exports to the Middle East, as well as to Europe.

As Dr. Aat explains, exporting goods from Thailand to the Middle East requires ships to pass through the Strait of Hormuz, which is also a major shipping route for oil and energy resources. Countries in the Middle East are also facing attacks on their oil infrastructures, core drivers of their economies like oil pipelines, ports and refineries.

“This route is not only vital for energy and fertiliser shipments, but also for goods going from Asia, including Thailand, as the ports are located in the Persian Gulf,” he explains.

Thailand exports goods to the Middle East worth about 12 billion US dollars each year, while exports to Europe are worth about 25 billion. Dr. Aat predicts that the current tensions will mean that Thailand could lose 110 million US dollars of export revenue to the two regions each day.

Thai exports that could be hardest hit are industrial goods, such as electronics, electrical appliances and computer parts, as global oil price rises are increasing production costs. Agricultural products, such as rubber, fruits, rice and tapioca, could also be affected.

A double-whammy?

The ongoing crisis could further weaken Thailand’s competitiveness in global markets. Therefore, the international trade expert suggests that the government should provide more financial support to Thai exporters, as they are already facing higher production costs.

Laying out the possible scenarios, on how increasing global oil prices will affect their production costs, is also essential.

“Thailand is now facing a double-whammy. Even without the war in the Middle East, we are already facing higher production costs. This makes it much harder for Thai exporters to compete in the global market. So, the government really needs to find ways to help them,” Dr. Aat concluded.