Thailand’s Energy Ministry has asked regulators to keep a close eye on developments in the Middle East lest these cause an oil and gas shortage in the import-dependent country, local media report.According to the Bangkok Post, the ministry had also ordered six oil refineries to start reporting their supply rates and sales volumes as well as throughput on a daily basis. Until now, refineries had to report these on a monthly basis.
Thailand’s strategic petroleum reserve is required to hold enough of the commodity for 30 to 45 days, which is within the average standard globally, and the ministry has not yet proposed to change this in anticipation of a possible supply shortage. Yet it is preparing for higher prices: the ministry said the country’s State Oil Fund has a sufficient amount of money in it to respond to price hikes.
rude oil is the top import commodity in Thailand, with refined oil products its top export commodity. The country produces oil locally as well, but nowhere near enough to satisfy demand. The average daily production has been falling as well: from over 150,000 bpd in 2017 to about 120,000 bpd since the start of 2019.
The saber-rattling in the Middle East has got more than just Thailand worried about oil prices. An exchange of thinly veiled threats between President Trump and the Iranian government was what sparked the latest bout of worry on the oil market as some expect an open military conflict.
The worry spiked when the U.S. ordered the evacuation of all non-emergency government employees from Iraq, suggesting the evacuation could be part of preparation for open confrontation with Iraq’s neighbor, Iran. Exxon also evacuated staff from the West Qurna 1 field in Iraq citing security concerns, which prompted a reaction of dissatisfaction from Baghdad.
Despite the intensifying concern about a possible confrontation in the Middle East, prices have not trended as high as they might have a few years ago before U.S. production really took off. Although Brent is still around US$70 a barrel, with WTI above US$60 a barrel, the benchmarks have yet to rise to US$80 and over as some analysts have predicted.