Thailand Diversifies Crude Oil Sources Beyond Middle East Amid Shipping Disruptions

Thailand is accelerating the diversification of its crude oil procurement sources as escalating conflicts disrupt key shipping routes like the Red Sea and the Strait of Hormuz. The nation plans to reduce its reliance on the Middle East, which historically accounted for 58% of its crude oil imports, primarily from the UAE and Saudi Arabia, and increase procurement from producers in Africa, the US, and the Asia-Pacific region. Energy authorities and oil traders are actively seeking alternative routes following attacks on shipping in the Red Sea attributed to Yemen's Houthi fighters and heightened tensions between the US and Iran. An executive from an oil company noted that the current global energy outlook could be more severe than during previous regional conflicts. Contingency plans, including purchasing crude from ships that departed before the latest disruptions and securing additional supplies from Africa, the US, and Southeast Asia, have already been activated. Should conditions worsen, rerouting shipments via the Cape of Good Hope, an ancient trade route between Europe and Asia, is being considered. However, this detour would add approximately 30 days to transport time and significantly increase costs, according to the executive. The crude oil premium—the extra charge above standard market prices—has surged over 400%, mirroring spikes seen during earlier conflicts this year, reflecting either oil quality or supply disruption risks, forcing refiners to pay substantially more for barrels. Plans to purchase Russian crude remain uncertain due to international sanctions imposed on Moscow following its invasion of Ukraine. Instead, Thailand has increased imports from the US and Argentina, stated the deputy energy permanent secretary. As of July 23, Thailand holds combined reserves of commercial, legal, in-transit, and confirmed-for-shipment crude oil sufficient to meet demand for 108 days, given its daily consumption of nearly 1 million barrels (92% imported, 8% domestic).