Conflict-Driven Energy Crisis Takes Toll On Thailand's Economy, Tourism

By Kenny Teng & Tuwaedaniya Meringing

BANGKOK, June 10 (Bernama) -- Thailand's 100-day energy crisis triggered by the conflict between Iran and the United States (US) has laid bare the country's dependence on imported energy and highlighted the need for structural reforms to bolster energy security.

The crisis reached its 100th day on June 7, with volatility in global oil markets and risks to shipping through the Strait of Hormuz continuing to exert pressure on fuel and electricity prices across Southeast Asia.

Associate Professor Dr Chaiwat Meesanthan, Director of the Institute of East Asian Studies at Thammasat University, said soaring crude oil prices and heightened risks to maritime transport had directly affected fuel and electricity prices in Thailand.

"The crisis has demonstrated that energy security is no longer just about maintaining sufficient reserves, but also about ensuring the economy can withstand prolonged periods of high energy costs," he told Bernama in an interview recently.

Since the conflict erupted on Feb 28, oil markets have been rattled by concerns over supply disruptions and shipping risks, sending energy costs higher across many import-dependent economies, including those in Southeast Asia.

Chaiwat estimated that more than half of the recent increase in Thailand's retail fuel prices stemmed from the conflict, particularly geopolitical risks surrounding the Strait of Hormuz.

He said Thailand's existing oil inventories and contracted supplies in transit could sustain consumption for several weeks or even a few months in the event of a severe supply disruption, although emergency measures would be needed to prioritise critical sectors and manage demand.

"The crisis has also accelerated efforts to diversify crude oil imports away from West Asia, with Thailand increasing purchases from Africa, the Americas, and regional suppliers," he said.

However, Chaiwat noted that the country remains structurally dependent on West Asia crude due to long-standing supply arrangements and refinery configurations.

On diesel subsidies, he said the government still has room to provide short-term support through the Oil Fuel Fund and tax measures, but prolonged intervention would place growing pressure on public finances.

"Energy transition is no longer an option but a necessity for national security and economic resilience," he said, adding that targeted assistance for vulnerable groups and essential sectors would be more sustainable than broad-based subsidies.

Meanwhile, Romlee Rakniyom, 56, a tourist van operator based in Krabi Province, said the conflict in West Asia had severely affected tourism in Krabi, a popular destination in southern Thailand.

"Tourists from West Asia and Scandinavia have virtually disappeared," he said.

He added that their arrivals have fallen by almost 100 per cent. Many charter flights have been cancelled due to higher fuel prices and surge in airfares.

Romlee said Indian tourists remained among the few groups still visiting the province in significant numbers, but overall foreign tourist arrivals had declined by about 70 per cent.

He expressed concern that a prolonged conflict and persistently high fuel prices could further weaken the tourism sector, a key economic driver for Krabi and other major destinations in Thailand.

-- BERNAMA