The sudden 6 baht per liter increase in prices across all fuel types, effective March 26, 2026 GMT+7, has caused significant alarm. The main causes come from accumulated domestic and international factors, as follows:
1. Main cause: Reduction of subsidies by the Oil Fund
The most direct factor is the decision by the Fuel Oil Fund Management Committee to "reduce the compensation rate," abruptly cutting fuel price subsidies due to:
Liquidity crisis: The Oil Fund has to bear subsidy costs of about 2,592 million baht daily (over 80 billion baht monthly), pushing the fund into severe negative status. Reducing subsidies is the last resort to maintain long-term stability.
Preventing smuggling: Prices in Thailand are much lower than in neighboring countries (for example, Malaysia’s prices surged to nearly 40 baht per liter), causing hoarding and illegal fuel exports.
2. External factor: Middle East war crisis
Global crude oil prices surged sharply in March 2026 GMT+7 due to geopolitical events:
US-Israel-Iran conflict: Attacks on Iran’s energy infrastructure at the end of February heightened market fears of supply shortages.
Closure of the Strait of Hormuz: This key oil transit route, responsible for one-fifth of global oil shipments, was blocked, causing Brent crude to soar past 111 dollars per barrel and sharply pushing up prices in the Singapore market.
3. Which types of fuel might rise further?
Despite the 6 baht increase, "premium" and "diesel" fuels remain highly vulnerable:
Premium group (Hi Premium): Some brands raised prices by up to 8 baht per liter in this adjustment and are expected to fluctuate more rapidly with the global market due to lack of subsidies.
Diesel: Although already increased, if global crude prices stay above 110-120 dollars, the Oil Fund may need to allow prices to reflect reality more closely to reduce debt burdens.