Fuel prices jump up to 22% in Thailand after subsidies slashed

BANGKOK – Millions of motorists across Thailand woke up on March 26 to the steepest fuel price increases in decades after the government moved to rein in subsidies strained by surging global oil costs.

A routine late night price announcement on March 25 revealed a sharper-than-expected 6 baht (23 Singapore cents) per-litre increase effective on March 26, sending petrol prices up 14 per cent to 22 per cent by the morning. Diesel – the backbone of Thailand’s transport, agriculture and industrial sectors – surged 18 per cent, amplifying the shock for households and businesses already facing rising costs.

The impact was immediate, with long lines forming at petrol stations overnight as drivers rushed to fill up before the price hike took effect. Concerns over shortages and rising costs had been building for weeks.

The increase marks a turning point for Thailand’s longstanding fuel-subsidy regime, introduced in the wake of the 1970s oil shocks. The Oil Fuel Fund, designed to stabilise and subsidise domestic prices, has seen its deficit widen as global crude costs climbed following the war in Iran, forcing the government to scale back support.

Prime Minister Anutin Charnvirakul’s government had already been forced to lift the diesel price cap this week to contain mounting fiscal pressure, underscoring the limits of state intervention as global energy markets tighten.

Higher fuel prices are expected to ripple through the economy, pushing up transport and production costs and adding to inflationary pressure on food and other essentials. BLOOMBERG