Thailand heavily exposed to the surge in oil prices after the closure of the Strait of d’Ormuz

Thailand is among the Asian economies most exposed to rising oil prices following Iran's closure of the Strait of Hormuz.

A CNBC report broadcast on Tuesday, March 3, indicates that Thailand could suffer some of the most serious consequences of rising oil prices in Asia following Iran's announcement of the closure of the Strait of Hormuz.

Senior commanders of Iran’s Islamic Revolutionary Guard Corps (IRGC) also warned that any ship attempting to transit through this waterway would be attacked.

The Strait of Hormuz, a key passage for global energy trade

CNBC, citing energy consultancy Kpler, said the Strait of Hormuz, located between Oman and Iran, will carry about 13 million barrels of crude oil per day in 2025, representing about 31% of global crude oil flows transported by sea.

The report indicates that approximately 20% of global LNG exports transit through the strait, a large portion of which is linked to Qatar.

He adds that Qatar temporarily halted its LNG production after Iranian drones attacked facilities in the industrial cities of Ras Laffan and Mesaieed.

Thailand is the most exposed country in ASEAN

CNBC cites an analysis by Nomura that Thailand is one of the Asian economies most exposed to an oil shock, as its net oil imports represent 4.7% of its GDP, the highest share in the region.

Nomura estimates that each 10% increase in the price of oil could worsen Thailand's current account balance by about 0.5% of GDP.

This prospect worries analysts as Brent prices have already risen by more than 10% since the start of the conflict.

Brent crude was trading at around $81 a barrel on Tuesday.

According to the CNBC report, some analysts believe that if the shutdown continues, oil prices could exceed US$100 a barrel.

Impact on an Asian scale

CNBC stated that other Asian economies would experience impacts to varying degrees.

Nomura identified India, South Korea and the Philippines as vulnerable due to their heavy reliance on energy imports.

Nomura added that South Asia could face the most immediate shock in terms of LNG.

According to Nomura, Qatar and the United Arab Emirates account for 99% of Pakistan's LNG imports and 72% of Bangladesh's imports, while India is doubly affected by rising crude oil import costs and soaring LNG prices.

Nomura also stated that Japan and South Korea were heavily dependent on Middle Eastern oil (approximately 75% and 70% respectively) and only had enough LNG reserves for 2 to 4 weeks.

China, on the other hand, would be better positioned in the short term.

According to Nomura, approximately 40% of its oil imports transit through the Strait of Hormuz.

However, the country has more than 7.6 million tonnes of LNG in stock, which provides a temporary buffer.

Some unconfirmed sources suggest that Chinese ships may be allowed to transit through the Strait of Hormuz, but this information has not been confirmed by Iranian authorities or major news agencies.

Malaysia was cited as an exception: as an energy exporter, the rise in oil prices could benefit government revenues, Nomura said.

See also:

Middle East conflict: Thailand activates its energy crisis plan

Cancelled flights: Thailand launches a plan d’aid for foreign tourists

Conflict in the Middle East: 99 flights cancelled in Thailand, global traffic shaken

Middle East conflict: over 14,700 flights disrupted, Thailand affected

Source: The Nation Thailand