BANGKOK, Thailand — Domestic fuel prices in Thailand are projected to remain high until the final quarter of the year, despite a recent decline in global crude benchmarks and the impending signing of a peace agreement between the United States and Iran. Energy sector projections indicate that Thai motorists will continue to face elevated costs at the pump, even as international developments signal a potential stabilization of global oil markets, the Bangkok Post reported.

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Global crude prices have experienced a noticeable slip, with Brent crude standing at US$90 per barrel on June 12, a significant drop from the earlier peaks seen in early March. However, Thai retail prices have not mirrored this downward trend. As of June 15, diesel was being sold at 39.80 baht per litre and gasohol 95 at 42.30 baht per litre, reflecting only marginal decreases compared to the previous month.

Several structural, geopolitical, and economic factors are converging to keep domestic prices high. Thailand imports the vast majority of its crude oil, making domestic costs highly sensitive to foreign exchange rate fluctuations. More critically, recent military conflicts in the Middle East have severely damaged vital oil production, storage, and transportation infrastructure, particularly refineries and liquefied natural gas plants. Because many Asian nations lack sufficient domestic refining capacity, this reduction in regional supply has driven up the cost of refined oil products, insulating the retail market from immediate relief.

Forward market indicators further suggest sustained pricing pressure. The latest forward price for diesel delivery in October remains at elevated levels around US$100 per barrel, signaling that wholesale costs will stay high well into the autumn. Thailand’s domestic pricing is closely tied to refined oil prices from the Singapore market, which serves as the most reliable regional benchmark for the country’s energy imports.

Domestic oil prices in Thailand are expected to remain elevated until the final quarter of this year, even though global crude benchmarks have eased and the US is set to sign a peace deal with Iran this Friday to end nearly four months of conflict in the Middle East.

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— Bangkok Post (@BangkokPostNews) June 16, 2026

The financial health of the Oil Fuel Fund also plays a decisive role in shaping retail prices. The fund is designed to cushion consumers against global market volatility by subsidizing fuel when prices surge and collecting levies when they fall. However, extensive subsidy spending over recent months has left the fund with a massive deficit. Although the shortfall narrowed slightly from 63.7 billion baht in mid-May to 58.4 billion baht by mid-June, authorities must continue collecting levies to repay the accumulated debt, preventing immediate reductions in retail pump prices.

The national tax structure further limits the flexibility of retail price adjustments. Excise, municipal, and value-added taxes constitute approximately 30 percent of the retail price, while refining costs account for the remaining 70 percent. The value-added tax is applied twice, at both the wholesale and retail levels, adding compounding financial pressure. Additionally, mandatory contributions to the Energy Conservation Promotion Fund are factored into the final cost. Because these taxes and levies are fixed on a per-litre basis, retail fuel prices do not automatically adjust downward in tandem with fluctuations in global crude oil markets.

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As the energy sector navigates these complex domestic and international variables, the government is focused on managing the Oil Fuel Fund’s deficit while maintaining stable energy supplies. Motorists and businesses are advised to anticipate sustained fuel costs through the third quarter, with any potential relief at the pump dependent on broader global market corrections and the successful implementation of regional peace agreements.

-Thailand News (TN)