Prolonged Iran War Drives Oil Prices Above $114 per Barrel, Raising Thailands Stagflation Risk

The world is confronting a major test as the situation in the Middle East rapidly intensifies. Following the US-Israel alliance's escalation into phase 2 attacks targeting Iran's utilities and energy infrastructure, Iran has retaliated by striking key oil facilities and transport routes. This has caused global crude oil prices to surge into a "dangerous level." This part sets the geopolitical context for the rising oil prices and the conflict’s impact on energy supply.

Latest Situation: Why Has Oil Surged Beyond $114 per Barrel?

Within just one week, crude oil prices have soared over 48%, with Brent crude recently reaching $114 per barrel. The main causes include:

• Strategic Attacks: Iran has attacked transport vessels in the Strait of Hormuz, which carries approximately 20% of the world’s oil shipments.
• Supply Disruptions: Major producers like the UAE and Kuwait have begun reducing output due to paralyzed transportation systems and full oil storage facilities.
• Commodity Index Surge: The Bloomberg Commodity Spot Index has broken its 2022 record (set during the Russia-Ukraine war), indicating that not only oil but global commodity prices are poised to rise.

Dr. Kobsak Warns of Entering Code "RED" Status

Dr. Kobsak Pootrakul, Deputy Managing Director of Bangkok Bank and former Minister attached to the Prime Minister’s Office, stated that oil prices at $110 signal extreme danger. If the situation remains unresolved, we could see a repeat of the Ukraine war scenario where oil hit $130 per barrel, leading to:

1. Global Inflation Spike: Immediate and sharp increases in living costs worldwide.
2. Asset Crisis: Stock markets and digital assets such as Bitcoin may crash dramatically, as seen in past crises.
3. Government Challenge: Sustaining energy prices through massive subsidies may not be feasible for long.

"A contingency plan must be prepared immediately: accelerate oil reserves, seriously promote solar and electric vehicles, and open new energy alternatives. It’s better to prepare than not," he emphasized.

Thailand Faces Risk of Stagflation Rather Than Deflation

Meanwhile, Dr. Anusorn Thamjai (People’s Party), former Chairman of the Audit Committee and Director at Bangchak Corporation Public Company Limited, analyzed that energy security is Thailand’s most vulnerable economic point. He warned the country may face stagflation—a stagnant economy combined with high inflation—which is more frightening than deflation.

• Yen Carry Trade Crisis: Japan, highly dependent on oil, will face pressure to raise interest rates, prompting global funds to sell risky assets to repay yen-denominated loans, causing turmoil in global financial markets.
• Four Key Recommendations: The government must expedite plans to develop electricity capacity, conserve energy, develop renewable energy, and reduce greenhouse gases. He also warned that if oil surpasses $120, subsidies may need to be reconsidered to preserve fiscal stability.

Government Response: Department of Internal Trade Tightens Controls

Amid concerns over rising prices, the Department of Internal Trade has taken action to quell panic as follows:

• No Panic Buying: It confirmed that consumer goods remain sufficient, and there is no need for stockpiling.
• Price Caps: The Prime Minister ordered diesel prices to be capped at no more than 30 baht per liter initially for 15 days.
• Law Enforcement: Authorities are closely monitoring the situation and will immediately take legal action against those exploiting the situation by overpricing.

Overall, this reflects that the current global oil situation "is not distant" and may prolong longer than expected. Transitioning to alternative energy and financial planning to manage potentially higher living costs could be critical survival strategies amid the Oil Crisis 2026.

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