The domestic diesel price in Thailand will remain unchanged at 32 baht a litre, even though the Israel-Iran conflict has pushed up world oil prices, the Oil Fuel Fund Office (Offo) said on Tuesday.
The Office has reduced motorists’ contributions to the Oil Fuel Fund by 0.5 baht a litre, effective from Wednesday, in order to keep the price steady.
Price regulation through the fund is needed as diesel comprises 50% of total fuel consumption in Thailand, used extensively in the transport and agricultural sectors, said Pornchai Jirakulpisan, director for policy and planning at Offo.
The fund, which serves as a buffer against crude oil price fluctuations, requires reduced contributions from motorists when global oil prices rise.
Brent crude, a global benchmark, was trading around $71 a barrel on Tuesday, compared with $62 on May 30.
The Dubai crude oil reference price, a benchmark used in Southeast Asia, was US$72.89 on Monday.
The Platts price benchmark for diesel is $90.28 per barrel, up from $88.02.
Mr Pornchai said the reduction of 0.5 baht per litre in diesel users’ contributions means the fund’s revenue will decrease by 31.1 million baht a day, from the current average of 94 million baht daily.
Revenue from gasoline users’ contributions should remain unchanged at 72.88 million baht per day.
“The reduction shows the Oil Fuel Fund is an important tool to maintain energy price stability for the public during an energy crisis,” said Mr Pornchai.
If the war between Israel and Iran intensifies, it will affect global crude oil prices, said Veerapat Kiatfuengfoo, permanent secretary to the Ministry of Energy.
The conflict sparked concerns that Iran may respond by blocking the Strait of Hormuz, an important route for international oil transport.
If the situation becomes more severe, authorities will consider increasing domestic oil reserves to ease the impact on prices in Thailand, said Mr Veerapat.