Bangkok: The Oil Fund is grappling with a significant deficit, now exceeding 80 billion baht, as reported by the Fuel Fund Office. The deficit reached an estimated 80,472 million baht as of August 30, 2026. This marks an increase of 2,080 million baht in just one week, largely driven by the continuous support for fuel prices. Factoring in the 17,442 million baht subsidy for refineries, the total energy subsidy for the year is nearing 100 billion baht. Despite the expiration of the Fuel Fund Act on September 24th, the Minister of Energy announced the extension of the biofuel subsidy.
According to Thai News Agency, the ongoing unrest in the Middle East, persisting for over six months, has significantly impacted global crude oil prices, exacerbating global inflation and driving price hikes. The situation escalated following a US military offensive against Iranian rocket launch sites on Larak Island, near the strategic Strait of Hormuz. This action, intended to prevent Iran's Islamic Revolutionary Guard Corps from deploying mines, led to retaliatory measures by the IRGC, causing crude oil prices to spike, with Brent crude trading at approximately $89.93 per barrel.
The government has employed both the Oil Fund and refinery subsidies to manage domestic oil prices. Currently, the Oil Fund is experiencing a deficit of 80,472 million baht, with a notable weekly increase. This includes a 40,867 million baht deficit in the oil account and a 39,605 million baht deficit in the LPG account. The cumulative energy subsidies are now approaching 100 billion baht. As global oil prices rise, the necessity for additional subsidies from the Oil Fund becomes apparent. Recent adjustments have increased subsidies for various diesel fuels and gasoline types.
Domestically, oil prices in Thailand face further pressure from the impending expiration of the biofuel price subsidy on September 24, 2026, as per the transitional provisions of the Fuel Fund Act B.E. 2562 (2019). The subsidy, extended twice since 2022, is set to reach its legal limit. If the retail fuel price subsidy is not renewed, prices are expected to rise, potentially impacting farmers who produce biofuels like palm oil and sugarcane.
Mr. Ekanat Promphan, Minister of Energy and Chairman of the Fuel Oil Fund Management Committee, has indicated plans to propose guidelines and measures to assist biofuels to the National Energy Policy and Planning Committee. A crisis plan will also be presented to the Cabinet for urgent approval. He emphasized that failing to compensate for biofuel price hikes could affect the economy and energy security. Appropriate levels and durations of assistance are deemed necessary to navigate the crisis effectively.
The Ministry of Energy is currently evaluating whether existing laws permit the Oil Fund to continue subsidizing and stabilizing retail prices, including biofuels, during energy price crises. This includes scenarios where retail diesel prices exceed 30 baht per liter or when global market prices experience sharp increases. Additionally, the government is preparing an emergency decree to borrow 200 billion baht for restructuring the energy sector and is drafting legislation to bolster the palm oil industry, aiming to shift subsidy efforts towards enhancing biofuel value rather than merely stabilizing gas station prices.