The Energy Policy Administration Committee has approved a budget worth around 29 billion baht to put a cap on the diesel price at below 30 baht per litre in line with an order from Prime Minister Prayut Chan-o-cha.
Transport operators last Tuesday called on the government to put a cap on the price at 25 baht a litre.
Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow said yesterday the 30-baht threshold is most appropriate and a pragmatic compromise with their request.
Up to 20 billion baht of the budget will come from loans to be obtained from commercial banks while 9 billion baht will come from the state Oil Fund.
The budget will allow the diesel price control to last until March next year.
Higher diesel prices will increase the costs of production and transport.
Mr Supattanapong said the relief measure is based on a possibility that global oil prices will return to normal levels after the winter during which energy for heaters is in high demand.
He said if global oil prices rise above US$90 per barrel, officials may need to cut the excise tax on oil, currently standing at between 5.15 baht and 5.99 baht per litre.
Thai Oil Plc (TOP), Thailand's largest oil refinery firm by capacity, estimated global oil prices will this week range between $78 and $84 per barrel for West Texas reference price market and between $81 and $87 per barrel for Brent reference price market.
Demand for oil is expected to increase to cope with a shortage of coal and natural gas in Europe and China.
Over this week, prices of oil, gas and coal will remain high due to the easing of lockdown measures and an increase in travel.
High oil prices also stemmed from the limitation of supply of crude oil from oil cartels.
TOP said the US oil reserve has returned to a level of 427 million barrels.
It is the same volume as it was before the country was hit by Hurricane Ida which forced many oil refineries in Louisiana to temporarily shut down.
More oil is likely to be added to the global oil market due to new crude oil production in the US, TOP said, citing a report by energy services firm Baker Hughes.