From Crisis to Strategy: Navigating Thailand’s Energy Security Amid Conflict in the Strait of Hormuz

Energy SecurityBlogs
Energy Security

The unfolding global energy shock 

The escalating conflict in the Middle East has rattled global energy markets, disrupting supply chains and sending prices soaring. The Strait of Hormuz, one of the world’s most critical energy chokepoints, has effectively been rendered impassable for many commercial vessels amid threats and attacks. As a result, a significant share of global oil and liquefied natural gas (LNG) flows has been affected, pushing oil prices above USD100 per barrel and driving Asian LNG prices up by roughly 80-90 percent within weeks. 1 2

The scale of the disruption is considerable. Roughly 25 percent of the world’s seaborne oil trade and nearly 20 percent of global LNG exports, primarily from Qatar and the UAE, typically transit the Strait of Hormuz.3 While the situation remains fluid and uncertainty around further escalation persists, some analysts argue that the fallout has already surpassed previous energy crises, including the oil shocks of the 1970s. Macquarie notes that, if the conflict continues into June or beyond, oil prices could rise further, potentially approaching USD 200 per barrel.4 For Asia, where economies rely heavily on imported energy, the risks are especially significant. 

In oil markets, a few mitigation options exist but are severely limited. The Saudi East-West and UAE Habshan-Fujairah oil pipelines provide alternative routes that bypass the Strait of Hormuz. However, together at maximum capacity, they can accommodate only roughly a quarter of the oil volumes that normally pass through the strait,5 ​and they themselves are also points of vulnerability.  Therefore, a substantial share of supply remains effectively stranded, with ripple effects already visible in refining, transport and downstream industries. Moreover, as elevated as prices already are, the reaction so far may still fall short of reflecting the full scale of the disruption. The buffers that initially absorbed the shock, including strategic reserves, spare capacity, and cargoes already in transit, are now being exhausted, leaving the market far more fragile than it appeared just weeks ago​. 6 

The situation is, in some respects, even more strained in LNG markets. Compared to oil, LNG is less fungible, meaning it cannot be as easily redirected or substituted in the global market since it depends on specialised liquefaction terminals, LNG carriers and regasification infrastructure that limit where it can be shipped and received. In addition, because LNG must be kept extremely cold to remain liquid, it can generally be economically stockpiled for only a few days, leaving limited buffers against sudden supply disruptions. Qatar’s Ras Laffan complex, which is responsible for roughly a fifth of global LNG supply, has been offline since early March following drone and missile strikes, with damage to key liquefaction units​.7 Even if the conflict were to de-escalate soon, restoring operations will take time. Facilities must undergo extensive repairs and be carefully brought back online, which is a process that can take weeks before initial shipments resume and significantly longer to return to full capacity. 

With Qatari exports curtailed, combined with LNG export facilities worldwide running near full utilisation​,8 buyers across Asia are competing for limited cargoes at sharply elevated prices. Inventories in many countries across the region cover only weeks of demand, leaving little room for prolonged disruption. At the same time, Europe’s gas storage levels have fallen to below 30 percent following a colder-than-average winter,9​ increasing the urgency to rebuild inventories ahead of next winter. If European buyers return aggressively to the LNG market in the coming months, competition for cargoes could intensify further, adding upward pressure on prices faced by Thailand and its regional peers.  

The depth of Thailand’s exposure  

Thailand enters this period of uncertainty with a relatively high degree of exposure, with energy imports accounting for roughly 7.5 percent of GDP​.10 While the country holds some buffers, including roughly 40-45 days of combined statutory and commercial oil stocks (as of early April) and foreign exchange cover sufficient to support imports for several months,11 12 its underlying dependence remains significant. Around 52 percent of Thailand’s oil and gas imports are sourced from the Middle East, compared to about 38 percent in Vietnam, 26 percent in the Philippines, and 16 percent in Indonesia​. 13

Rising LNG and oil prices push up costs for electricity, industrial production, and transport, putting pressure on businesses and households alike. These increases can drive broader inflation, particularly when a weakening Thai baht raises the cost of imported fuels during global crises. Higher energy costs also erode Thailand’s export competitiveness and may discourage foreign investment, especially as regional peers accelerate their shift towards renewable energy. Energy‑intensive industries, facing tighter margins and potential gas supply constraints, may scale back operations or lay off employees, dampening business activities and reducing household income.

Government efforts to cushion the impact through subsidies or price controls may ease short‑term hardship but involve trade-offs. Over time, such measures can limit fiscal space for other development priorities, including healthcare, education, and infrastructure, while widening fiscal deficits and raising long‑term risks such as higher debt‑service burdens and weaker investor confidence.  

Energy as geopolitical leverage & other converging risks 

Beyond the tangible economic and social pressures already emerging in Thailand, the current disruption underscores deeper structural shifts in the global energy landscape, with implications for decision‑making well beyond the immediate crisis. One of the most consequential lessons is the renewed use of energy as a geopolitical instrument: states are increasingly leveraging control over critical chokepoints and energy resources to advance strategic objectives. Iran’s efforts to choke off traffic through the Strait of Hormuz show how control of a critical chokepoint can be employed as a form of geopolitical leverage. Meanwhile, the Red Sea has emerged as a new flashpoint: Yemen’s Iran‑aligned Houthi movement has signalled its willingness to renew attacks on vessels transiting the Bab al‑Mandab Strait in the context of this broader conflict,14 ​a move that could further tighten global energy markets.  

Exporting countries may also limit flows to buyers to advance broader geopolitical objectives, as was the case when Russia reduced gas deliveries to Europe after 2022 and redirected exports towards buyers in Asia​.15 Long-term contracts, while still important, may provide only partial insulation for buyers if broader geopolitical dynamics come into play. In this context, supply security is shaped as much by relationships and alignment as by commercial arrangements. 

Caught between global conflicts and the manoeuvring of major geopolitical actors, Thailand now faces a growing layer of risk as energy is increasingly employed as a geopolitical tool while its import needs continue to expand. The country’s growing reliance on imported energy has been predicated on the assumption that global markets will deliver supply when needed, albeit at sometimes elevated prices. However, recent events make clear that access itself can no longer be taken for granted.  

Moreover, several emerging forces could further intensify these pressures. One is the rapid growth in demand linked to digital infrastructure and artificial intelligence. As data centres and AI-related industries expand, they are likely to concentrate energy demand in higher-income economies that can absorb elevated prices. In tight markets, this could draw LNG cargoes towards these demand centres, potentially increasing competition for more price-sensitive importing countries such as Thailand. 

At the same time, risks are becoming more interconnected. Military conflicts, sanctions, cyber disruptions, and climate-related events can overlap, creating cascading effects across energy systems. Supply chains that appear stable under normal conditions may become more vulnerable when multiple stresses occur simultaneously. In parallel, major exporters may face domestic pressure to limit overseas shipments during periods of high prices or supply strain, which could further tighten global markets. 

These trends are unfolding against a backdrop of rising geopolitical tension and a weakening of multilateral coordination. Trade frictions, sanctions, and strategic competition are becoming more pronounced, while conflicts are increasing in frequency and intensity. In such an environment, energy flows are more likely to be shaped by national interest and security considerations, reinforcing the sense that markets alone cannot be relied upon to ensure stability. 

The path to building a more secure, resilient energy future 

Under these conditions, there is a strong case for rethinking how energy strategies are designed and implemented. One priority is to incorporate a wider range of scenarios into planning processes. This includes not only price volatility, but also the possibility of supply disruptions linked to geopolitical developments, as well as overlapping risks from other domains. Building resilience requires anticipating how different shocks might interact, rather than treating them in isolation. Importantly, planning frameworks also need to balance efficiency with resilience, ensuring that short-term cost considerations do not overshadow long-term security. 

Energy diplomacy will remain essential. Building a varied portfolio of international suppliers and deepening regional cooperation can help mitigate risks that stem from concentrated supply chains. Accelerating adoption of electric vehicles and a more diverse generation mix, particularly domestic renewables like solar and wind, can substantially reduce reliance on imported fuels while strengthening the system’s ability to withstand periods of stress, especially when coupled with enhanced system flexibility solutions. Crucially, a well-managed transition towards high shares of renewables and increased electrification across sectors would also support broader economic and development objectives, including competitiveness, innovation and environmental sustainability. 

While the energy transition provides an important part of the solution to today’s energy crisis, it is not without its own complexities and risks. Renewable energy technologies depend on supply chains for critical minerals and manufacturing, many of which are geographically concentrated. These dependencies introduce new forms of risk that require careful management. However, it is important to recognise that the nature of these risks differs in meaningful ways from those associated with fossil fuels. Once renewable capacity is installed, it draws on domestic, freely available natural resources such as sunlight and wind, which are not subject to international disruptions. Challenges related to variability and system integration can be addressed through grid investment, storage solutions, improved forecasting, and more flexible demand patterns. While constraints or disruptions in technology markets may slow the pace of new deployments, they are less likely to trigger immediate disruptions to energy supply and the economy. 

The current crisis is a stark reminder that energy security is evolving in ways that carry significant strategic and economic implications. For Thailand, the challenge is no longer limited to securing supply at competitive prices. It is about navigating a system where access, reliability, and risk are shaped by an increasingly complex mix of market forces and geopolitical realities. This moment offers Thailand an opportunity to strengthen resilience in a system where pressure points are becoming more deeply embedded. 

Written by Tisha-Nok Krecke, Project Manager Southeast Asia Power System Transformation, Agora Energiewende 

​​

  1. Bloomberg, “US Oil Closes Above $100 for First Time Since 2022 on Iran War,” March 30, 2026, https://www.bloomberg.com/news/articles/2026-03-30/us-crude-oil-settles-above-100-for-first-time-since-2022 ↩︎
  2. Reuters, “In Tight Global Market, Well-Positioned China Resells Record LNG Volumes,” April 1, 2026, https://www.reuters.com/business/energy/tight-global-market-well-positioned-china-resells-record-lng-volumes-2026-04-01/ ↩︎
  3. International Energy Agency, “Strait of Hormuz: Factsheet,” February 2026, https://www.iea.org/about/oil-security-and-emergency-response/strait-of-hormuz ↩︎
  4. Bloomberg, “Brace for $200 Oil If War Lasts Until June, Macquarie,” March 27, 2026, https://www.bloomberg.com/news/articles/2026-03-27/brace-for-200-oil-if-the-war-lasts-till-june-macquarie-warns . ↩︎
  5. MarketMinute, “Global Markets Reel as Iran Effectively Closes the Strait of Hormuz: A New Era of Energy Insecurity,” March 20, 2026, https://www.financialcontent.com/article/marketminute-2026-3-20-global-markets-reel-as-iran-effectively-closes-the-strait-of-hormuz-a-new-era-of-energy-insecurity ↩︎
  6. Rystad Energy, “The Oil Market Did Not Underreact. It Just Had Buffers,” March 26, 2026, https://www.rystadenergy.com/insights/oil-market-did-not-underreact-it-just-had-buffers ↩︎
  7. The Economist, “Even the Best-Case Scenario for Energy Markets Is Disastrous,” March 22, 2026, https://www.economist.com/finance-and-economics/2026/03/22/even-the-best-case-scenario-for-energy-markets-is-disastrous. ↩︎
  8. The Economist, “Liquefied Natural Gas: The Overlooked Economic Chokepoint,” March 11, 2026, https://www.economist.com/finance-and-economics/2026/03/11/liquefied-natural-gas-the-overlooked-economic-chokepoint ↩︎
  9. POLITICO, “EU Fears Panic Buying as Gas Reserves Run Low,” March 18, 2026, https://www.politico.eu/article/eu-fear-panic-buy-gas-reserves-low-energy-war-iran/ ↩︎
  10. The Economist, “Which Country Is the Biggest Loser from the Energy Shock?” March 19, 2026, https://www.economist.com/finance-and-economics/2026/03/19/which-country-is-the-biggest-loser-from-the-energy-shock ↩︎
  11. The Diplomat, “Thailand’s Brittle Defense Against Oil Shocks,” April 1, 2026, https://thediplomat.com/2026/04/thailands-brittle-defense-against-oil-shocks/ ↩︎
  12. Thairath, “นายกฯ ขอบคุณคนไทยช่วยประหยัดพลังงาน ดันสต๊อกน้ำมันพุ่ง ยืดเวลาใช้ได้นานขึ้น,” April 8, 2026, https://www.thairath.co.th/news/politic/2925484 ↩︎
  13. The Economist, “Which Country Is the Biggest Loser from the Energy Shock?” March 19, 2026, https://www.economist.com/finance-and-economics/2026/03/19/which-country-is-the-biggest-loser-from-the-energy-shock ↩︎
  14. Reuters, “Yemen’s Houthis Ready to Join Iran War if Needed, Raising New Shipping Risk,” March 26, 2026, https://www.reuters.com/world/middle-east/yemens-houthis-ready-join-iran-war-if-needed-raising-new-shipping-risk-2026-03-26/ ↩︎
  15. Eurasia Review, “Russia’s Energy Markets: Post-Ukraine War Transformation and 2026 Outlook – Analysis,” December 29, 2025, https://www.eurasiareview.com/29122025-russias-energy-markets-post-ukraine-war-transformation-and-2026-outlook-analysis/ ↩︎

Related