It’s a grueling moment to lead a government. The U.S.-Israel war with Iran is driving severe economic disruptions and geopolitical volatilities that underscore the cold logic of hard power. Although Thailand’s defense against oil shocks looks better fortified than that of its mainland Southeast Asian neighbors, at least in immediate terms, the domestic verdict is not at all in favor of the Anutin Charnvirakul 2.0 administration.

The threats from rising oil prices are acute: worsening inflation, skyrocketing transportation and production costs, and reduced consumer purchasing power. It doesn’t help that Thailand is already trailing other Southeast Asian economies in growth and has alarmingly high household debt. Despite being somewhat self-sufficient in gas, Thailand’s crude oil production is limited, making a high import dependency of over 90 percent unavoidable.

With reference to a Krungsri Bank publication, nearly 60 percent of Thailand’s crude oil imports come from the Middle East, with 0.3 million barrels transiting through the Strait of Hormuz per day. Because crude oil from different sources gives different yields, and because Thailand’s complex refineries are geared toward Middle Eastern crude to maximize diesel production, shifting to alternatives is easier said than done. Based on last year’s data, 67 million liters of Thailand’s total 141 million liters of daily refined oil consumption were diesel.

Thailand does, however, have relative flexibility in how it manages its reserves and prices. First, Thailand has six main refineries, supposedly significant crude oil storage, and a refining capacity that ranks among ASEAN’s forefront, second only to Singapore and on par with Indonesia. In normal times, the output from Thai refineries exceeds domestic demand, thereby facilitating exports to regional states, including China. In emergencies, Thailand could halt exports to bolster its own national reserves. Currently, Thailand has halted all exports except to Laos and Myanmar, both of which play important roles in powering the Thai grid. That the official figure of reserves fluctuates, jumping from 61 to 103 days, is therefore not without reason.

Second, there’s the Oil Fuel Fund – generally financed through levies imposed on domestic fuel consumers – to provide subsidies for retail oil prices when needed, shielding ordinary Thais against price shocks. Subsidies obviously cannot work indefinitely and will be considered in more detail later. But now that Thailand has started lifting price caps to safeguard its fiscal stability, diesel prices continue to be substantially supported and remain within ASEAN’s more affordable tier.

There are other factors that have cushioned Thailand against oil shocks. The country’s facilitative atmosphere for electric vehicles, with a notable pool of current and prospective users, is one. More consequentially, as The Diplomat’s Sebastian Strangio wrote earlier this week, Thailand has proven successful in securing a passage arrangement with Iran. On March 23, a Thai oil tanker became the first in Southeast Asia to safely transit the Strait of Hormuz without having to pay a toll booth.

This is striking not so much because Thailand and Iran recently had a spell of friction after a Thai-flagged bulk carrier attempting to cross the Strait was struck by Iranian projectiles, but rather because Thailand is a formal U.S. ally. Indeed, just as cooperation with Iran was materializing, Thailand was welcoming a scheduled port call by the U.S. 7th Fleet flagship USS Blue Ridge. Moreover, Thailand has maintained perhaps the most visible ties with Israel out of any ASEAN nation as a tourism hub and labor provider. Altogether, a degree of Thai diplomatic brilliance cannot be denied, even if good fortune has a role to play.

Of course, the very advantages Thailand has can easily turn into sources of domestic exploitation and discontent if not properly managed. Subsidies are the most straightforward. As much as this is an anomaly elsewhere, the standard practice among Thai governments for some twenty years has been to turn to the Oil Fuel Fund when global prices peak. Populist agendas may have been at play too, according to an analysis by the Thailand Development Research Institute. A sustained reliance on subsidies ultimately translates into an accumulated deficit and distorted public expectations, making Thailand more prone to a sharp snap when domestic rates catch up with global prices, if last week’s unprecedented one-time 6-baht hike is any indication.

Understanding the negative interplay between the apparently ample reserves and subsidies requires a look into Thailand’s layered fuel trading structure under the Fuel Trade Act. Refineries sit at the top of the pyramid, followed by Section 7 major traders – big-name oil companies as we know them. Section 7 traders then supply Section 11 branded fuel stations, effectively providing direct-to-consumer access, as well as Section 10 wholesale bulk buyers, commonly called “jobbers.” These jobbers distribute to various large and small businesses in industrial, agricultural, and logistical sectors at the global market rates – something necessary for maintaining international credibility.

The bottom line is that there are two prices during crises:  subsidized retail prices and globally-aligned prices. And entities normally buying in bulk without having to deal with retail branding obligations have greater incentives to get subsidized fuel meant for the general public. At the same time, incentives exist for traders at any level to hoard fuel and maximize their profits – legally or otherwise. Either one of these reasons, or a combination of both, explains why many stations were tapped out before the 6-baht hike.

Why the public is inclined to think less in terms of consumer-focused panic or strategic buying and more about predatory hoarding by suppliers has much to do with Thailand’s weak accountability mechanisms and the popular narrative of conglomerate dominance in state governance. With politicians across the left-right spectrum referring to the “hooded men” (ไอ้โม่ง) and “invisible fuel” as they scrutinize fuel shortages, the fuel hoarding theory is amplified. Ironically, the former energy minister and his advisor between 2023 and 2025, namely Pirapan Salirathavibhaga and Atavit Suwanpakdee, might be the most vocal critics. Atavit, for his part, outright asserted that the “hooded men” are refineries.

Poor crisis communication by the Anutin government has worsened the public mood. That the 6-baht overnight fuel hike was not preceded by enough warning has drawn fierce criticism. While an incremental rise definitely makes more sense, one could somewhat understand that the government did not want to incite panic-buying any further. What remains impossible to understand is the appointment of Phiphat Ratchakitprakarn, a veteran minister and a core member of the ruling Bhumjaithai Party, as the frontman to handle the fuel crisis despite his well-known origin as a fuel trader, in turn adding ammunition to the narrative that Thailand is steered by conglomerate interests. Whether this was a result of tone-deafness or blatant indifference is up to interpretation.

In all fairness, government interventions in an oil crisis are not easy. They require balancing competing interests and dealing with deep structural deficits. Yet strategic communication to the public remains an area that can be readily improved. With the Middle Eastern war not looking to calm down any time soon, and with other troubling trends in the world, many more tests await the Anutin government.