The Trade Policy and Strategy Office (TNSC) revealed that although OPEC is accelerating oil production to compensate for global supply losses, it is expected to be insufficient. Rising oil prices have pushed Thai inflation soaring due to surging costs of goods, energy, and transportation. Moreover, income from over 77,000 workers has vanished, Middle Eastern tourists have sharply declined, and the Thai baht is volatile, all impacting the Thai economy.
Mr. Nantapong Jiralertpong, Director of the Trade Policy and Strategy Office (TNSC), discussed the Middle East conflict situation. Although oil-producing countries and others under OPEC+, led by Saudi Arabia and Russia, held an online meeting on 1 Mar 2026 to assess the oil market and agreed to increase crude oil production by 206,000 barrels per day starting April 2026 to stabilize the market and ease high oil prices, analysts believe this increase may not be sufficient. It may fail to immediately compensate for lost supply if the Strait of Hormuz, which handles 20% of the world’s oil shipments, remains closed.
Thus, the current situation represents a Negative Supply Shock that may cause production costs to surge due to the Strait of Hormuz closure, leading to soaring crude oil prices and pressuring inflation globally and in Thailand. Higher oil prices increase transportation and electricity costs, raising production costs and product prices. Additionally, Middle Eastern tourists—who have strong purchasing power and often travel to Thailand for leisure and medical services—may reduce visits due to travel restrictions and safety concerns. This could also worry tourists from other regions about long-distance travel, potentially impacting the overall tourism industry in the first quarter.
Meanwhile, income from over 77,000 Thai workers in high-risk areas, which supports families in agriculture and local communities, would be lost immediately if evacuation occurs, increasing the government’s domestic employment burden. Furthermore, uncertainty may cause households to delay purchasing durable or luxury goods, preferring to keep cash for emergencies.
At the same time, rising tensions may affect investment sentiment and financial market stability, prompting foreign investors to move capital and causing high volatility in the Thai baht. This volatility poses a major challenge for risk management among importers and exporters. Geopolitical uncertainty may also delay foreign direct investment projects under consideration as investors reassess the situation, which could impact Thailand’s long-term economic growth if the conflict prolongs.
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