Local oil prices set to fall as global market eases after US-Iran peace pact

Domestic retail oil prices are expected to gradually decline following a drop in global crude prices sparked by a peace agreement between the United States and Iran, according to the Ministry of Energy.

Energy Minister Akanat Promphan said yesterday that the agreement to ease tensions and pursue peace has led to a steady decrease in crude prices, reflecting a significant reduction in energy supply anxieties.

Akanat stated that the ministry is closely monitoring the global market, particularly the Singapore refined oil prices which serve as the benchmark for Thailand's retail fuel pricing. This close oversight aims to ensure that domestic pump prices are adjusted downward swiftly to reflect actual costs.

During the recent period of market volatility driven by Middle East conflicts, the ministry used mechanisms to manage ex-refinery prices to cushion the impact on the public, he said. This intervention successfully redirected excess refining margins to ease consumers' energy burdens by more than 8.3 billion baht.

Consequently, domestic diesel prices have seen a steady decline over the past week.

The minister projected that, if the Middle East situation remains stable, oil prices will likely return to normal in the near future.

Addressing the financial health of the Oil Fuel Fund, Akanat revealed that he ordered a comprehensive review of the fund's balance sheet using actual financial data rather than past projections.

The audit showed that the fund's status is improving faster than anticipated. The deficit, which was previously expected to exceed 60 billion baht, has now narrowed to approximately 57 billion baht, demonstrating more efficient energy management over the recent past.

Furthermore, the ministry has frozen about 30 billion baht in returns earmarked for certain oil traders currently under investigation for suspected hoarding and unfair profiteering.

This measure has significantly bolstered the fund's liquidity, enabling the government to manage operations within the existing borrowing framework, without requiring a new royal decree for additional Finance Ministry loan guarantees.

Akanat reiterated that the government will continue to manage the situation using available funds and existing mechanisms to avoid generating additional public debt.

This approach is aimed at safeguarding fiscal stability while protecting the public from the high cost of living amid ongoing global economic uncertainties.

For the long term, the Energy Ministry plans to establish a permanent regulatory mechanism to oversee ex-refinery prices and refining margins, particularly during global energy crises, to prevent unjustified spikes in refining costs.

Relevant laws will also be amended to grant more regulatory power to the Energy Policy Administration Committee (EPAC), to ensure more efficient energy management in the future.