Bangkok: PTT Public Company Limited has assured that there will be no oil shortage, albeit warning of soaring prices due to a 400% increase in premiums and an additional $10 per barrel in transportation costs. The company is urging the government to lift export controls to enable refineries to operate at full capacity.
According to Thai News Agency, Mr. Jaturong Woravit-Surawatana, Senior Vice President of PTT's International Trading Business Unit, highlighted on his Facebook page the intensifying global energy situation. The Houthi rebels' threats against shipping in the Bab el-Mandeb Strait, a critical oil transport route from the Red Sea, are exacerbating the situation. This development is impacting crude oil shipments from Saudi Arabia, which previously circumvented the Strait of Hormuz by exporting via the Yanbu port on the Red Sea.
In response, PTT has developed contingency plans, including negotiating a crude swap with Saudi Arabia and purchasing crude oil already in transit. Additionally, sourcing oil through the Mediterranean Sea and around the Cape of Good Hope to Thailand could extend delivery times by approximately 30 days and increase transportation costs by about $10 per barrel. PTT is also exploring sourcing from other producers through its partner network to guarantee uninterrupted energy supply.
Mr. Jaturong reassured the public of PTT's capacity to manage risks and maintain energy security. He noted, however, that the crude oil premium has surged by over 400%, reminiscent of the levels seen during the conflict in March, which could significantly impact energy costs. He encouraged all sectors to conserve and use energy efficiently.
He further explained that Thai refineries are currently not operating at full capacity due to a seasonal dip in domestic oil demand during the rainy season and an incomplete resumption of exports. He urged support for enabling refineries to function at full production capacity, which could enhance GDP and increase export revenue. Mr. Jaturong also stressed the importance of monitoring the situation closely as geopolitical instability could have an unforeseen impact on energy prices and the global economy.
International news agencies have reported fluctuations in global oil prices, with a temporary decrease due to profit-taking and easing supply concerns following news of potential negotiations between the US and Iran. Despite this, tensions in the Middle East and developments in the Red Sea remain critical areas to watch.
In regional markets, Singapore saw declines in gasoline, diesel, and Dubai crude prices. Meanwhile, despite unchanged fuel prices in Thailand due to subsidies, the government's control over refinery exports has led to overcapacity, compelling several refineries to reduce their refining capacity by about 15%. This issue has been presented to the Minister of Energy but remains unresolved.