The domestic price of diesel will fall to 34.50 baht a litre later this month, down from 34.94 baht, following a decline in global crude oil prices.
The new retail price will take effect at 5am on Feb 15, said Wisak Watanasap, director of the state Oil Fuel Fund Office (Offo). It will be the first decline in seven months.
Global oil prices are expected to decrease this year as the world economy slows down. Oil supply will slightly exceed demand, but global oil prices continue to fluctuate and can go up at any time if supply is disrupted, analysts from the national oil and gas conglomerate PTT Plc have noted
Last month, the Singapore reference price for diesel dropped to US$116.12 per barrel on average, from $135.53 in November.
The authorities no longer allocate money from the Oil Fuel Fund to subsidise diesel, but the price remains low because the waiver of the five-baht excise tax will remain in place until May 20.
“Despite the prolonged Russia-Ukraine war, we hope the oil supply constraints will be eased and meet global demand. That will allow the government to resume excise tax collection,” said Mr Wisak.
Offo currently collects 5.19 baht a litre from fuel sales to support the fund in order to settle debts incurred when it spent money to subsidise both diesel and liquefied petroleum gas (LPG) prices last year.
Energy authorities had to request a 30-billion-baht loan to support the fast-dwindling fund which was running a loss of nearly 130 billion baht.
In 2022, Offo subsidised diesel at 14 baht a litre, costing the fund 20 billion baht a month. The situation led PTT to allocate 3 billion baht to help the government support the fund.
The company runs oil refineries, with refined oil accounting for 77% of the country’s total capacity.
According to Offo, the fund was 113 billion baht in the red as of Monday, with diesel subsidies accounting for 68.1 billion and LPG subsidies 45.3 billion.
Ponchai Jirakunptsarn, chief of the Offo policy and strategy department, said officials would decide next month whether to increase the LPG price by one baht per kilogramme, leading to a rise to 423 baht per 15kg cylinder, up from 408 baht.
The market price of LPG is currently 470 baht per cylinder.