Energy policymakers may cut the national legal oil reserve period from 22 days to 18 if global oil prices climb above US$70 per barrel for a "long period of time".
Energy Minister Siri Jirapongphun yesterday said cutting oil reserves would curb domestic oil retail prices.
The government asked the Energy Business Department to assess the country's oil reserves, he said.
Dubai crude oil prices on Thursday rose to nearly $66 per barrel, up from an average of $53.70 last year.
In 2014, when global oil prices collapsed from $100 to below $40, policymakers requested that oil refineries and oil traders increase their oil reserves (both refined and crude) to 22 days. The move was aimed at mitigating oil shortages and bolstering reserves.
Mr Siri said the ministry will no longer cap the retail price of oil because it would not be useful from an economic standpoint.
Policymakers have capped retail oil and gas prices despite declining taxes and levy collection from motorists, on top of directly subsidising state-controlled PTT Plc.
Cooking gas and diesel were the petroleum products that received the largest subsidies.
"It no longer makes sense to cap the retail price of oil," Mr Siri said. "It will entice users to consume oil inefficiently."
From 2008 to 2013, the petroleum subsidy amounted to 300 billion baht, said energy expert Manoon Siriwan.
Global prices are in an upward trend, Mr Siri said. Dubai crude oil increased 23% to $65.80 a barrel on Thursday, up from last year's $53.70 average.
The Singapore refined oil market is following suit. Petrol climbed to $78.90 last Thursday, up from $75.80 in December.
During this same period, Thai oil retail prices only climbed 3-5% because the baht appreciated to 31 versus the dollar from 33.