The unfolding political tension in the Israeli-Hamas battle hasn’t just raised alarms geopolitically. It has sent shockwaves to the international oil market also, causing a jolting 4% swell in the prices of global crude oil. This prevalent market uncertainty tied to tumultuous political landscape has plunged oil corporations into a state of trepidation. Among those voicing their concerns was Montri Rawanchaikul, the CEO of PTT Exploration and Production Plc (PTTEP).
Montri Rawanchaikul expressed apprehension that this geopolitical feud may potentially lead to hindrances in the Middle East region’s petroleum production. Likewise, Auttapol Rerkpiboon, at the helm of PTT Plc as CEO, highlighted the same fear. He flagged an intrusive pattern of a steep spike in global oil prices, followed closely by a modest decline, with prices steadfastly remaining above the pre-conflict levels. Rerkpiboon ascribed this pattern to the fears steaming from the ongoing conflict.
Subsequently, PTT’s oil refining subsidiary, Thai Oil Plc, presented a projection that the fluctuating prices of West Texas Intermediate crude oil are likely to average anywhere between the US$80 to US$87 per barrel range in the coming days. This forecast comes in the wake of previous oil prices worldwide skyrocketing past the US$100 per barrel mark in last year’s second quarter. The sharp spike was a direct result of anguish surrounding the possible disruptions in supply, stoked by the Russia-Ukraine geopolitical standoff.
The fiery conflict didn’t end at inflating oil prices – it kindled a leap in the average electricity tariffs as well. The hike in LNG prices on the spot market had a noticeable knock-on effect on the domestic energy sector. The availability of domestic gas at palatable prices dwindling, Thailand had to ramp up its LNG imports.
Montri voiced concerns that in the absence of a resolution achieved through negotiations to end the Israeli-Palestinian conflict, LNG prices could potentially suffer a jolt. “Although we operate within the energy sector, any substantial surge in energy prices is unwelcome. It brings adverse effects on the general population and business activities,” Montri quipped.
Chairman of the Federation of Thai Industries, Kriengkrai Thiennukul, urged manufacturers to sensibly manage their energy consumption as high oil prices could inflate production costs. Nutta Mahattana, Assistant Managing Director for Investment Strategies at Krungthai Asset Management, echoed the same sentiment.
Asia Plus Securities (ASPS) echoed concerns about the need to keep a close watch on the unfolding conflict. ASPS advised vigilance due to the prospect of the conflict spreading and escalating beyond the warring regions. The firm observed that not only were oil prices on the rise in response to the growing threat, but safe asset prices had also surged. To underpin its concerns, ASPS articulated that the world’s leading crude oil producers, including the US, Canada, and Middle East countries, might experience price fluctuations if the conflict escalates.
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