Bangkok: Thanakhon instructed the Ministry of Industry to monitor the US-Iran conflict, fearing its impact on Thai industry, and urged a swift assessment of the impact and the development of systematic countermeasures. Thanagorn has instructed the Ministry of Industry to closely monitor the potential US-Iran conflict, fearing its impact on Thai industry. He urged a swift assessment of the impact and the development of systematic countermeasures.
According to Thai News Agency, Mr. Thanagorn Wangboonkongchana, Minister of Industry, revealed that the Ministry of Industry is concerned about the escalating conflict in the Middle East, which could impact the global economy and Thai industry, particularly oil prices and logistics costs. He has instructed agencies under the Ministry of Industry to assess the potential impacts and directed the Office of Industrial Economics (OIE) to closely monitor the situation to evaluate the effects on the Thai industrial sector and develop systematic response plans.
Although direct trade between Thailand and Iran is not very high, totaling US$146.18 million in 2025 (Thailand exporting US$136.82 million and importing US$9.36 million), the significant risk lies in its indirect impact through the global energy structure and international transportation. Trade between Thailand and 15 countries in the Middle East totaled US$40,535.63 million, with Thailand importing as much as US$28,060.05 million from the region, resulting in a trade deficit of US$15,584.47 million. Because Thailand primarily imports high-value energy products, its industries are highly sensitive to fluctuations in energy prices and logistics costs in the region.
Furthermore, Iran's closure of shipping routes through the Strait of Hormuz, a waterway used for more than 20% of global crude oil shipments, significantly increases the risk of global oil supply disruptions. It is projected that if the conflict escalates and becomes prolonged, crude oil prices could rise from the current level of approximately US$70 per barrel to around US$100-105 per barrel. This would consequently lead to higher energy costs, transportation costs, and production costs for Thailand's industries.
Regarding the impact on the production sector, an analysis using an input-output table reveals that the increase in diesel prices will affect energy and transportation costs for several industries, particularly those with a high proportion of diesel usage in their production processes. These include iron and steel (7.93%), textile dyeing and finishing (6.31%), basic chemicals (4.82%), cement (4.43%), metal products (4.01%), glass and glass products (2.74%), and clothing and textiles (2.53%). These industries are likely to be most affected if diesel prices continue to rise. Furthermore, it may lead to higher shipping rates and insurance costs, impacting the logistics costs for Thai businesses, especially those exporting to the Middle East and Europe, which rely heavily on sea transport. They may face delays due to rerouting.
According to a macroeconomic model developed by the Office of Industrial Economics (OIE), a rise in crude oil prices due to the conflict would impact the Thai industrial sector in two phases: In the short term, a 10-20% increase in crude oil prices (approximately US$77-85 per barrel) would result in a decrease in industrial GDP of approximately 2,700-3,000 million baht, or about 0.06% of total industrial GDP. In the medium term, a 50% increase in crude oil prices (approximately US$100-105 per barrel) would lead to a decrease in industrial GDP of approximately 10,125-12,000 million baht, or about 0.15% of total industrial GDP. This reflects the fact that energy price volatility affects Thai manufacturing.
'The Ministry of Industry has assigned the Office of Industrial Economics (OIE) to closely monitor and track the situation, coordinate with industrial operators in various sectors, and conduct in-depth assessments of the impact on the production sector. This is to develop systematic response measures, including monitoring energy costs, considering mitigation measures for businesses, especially SMEs, promoting machinery upgrades to reduce energy consumption, and supporting risk management in transportation, exchange rates, and export market diversification. This is to maintain the competitiveness of Thai industries amidst high global economic uncertainty,' Mr. Thanagorn said.