October 7, 2024
BANGKOK – The Thai National Shippers’ Council has expressed concern that the renewed violence in the Middle East will impact Thai exports to the region, which is considered a “strategic market” for Thailand.
The increasing hostilities between Israel and Iran have raised worries of a prolonged and escalating war in the region, which would inevitably affect global trade and the world economy.
Currently, Thailand’s Middle East accounts for 2.8% of total Thai exports and 10.7% of total imports.
Council president Chaichan Charoensook said the most critical risk lies in the strategic Strait of Hormuz, a key transit route for global oil shipments from Persian Gulf countries.
“If the Strait of Hormuz were to be closed, oil prices would undoubtedly skyrocket, affecting the global economy that relies on oil. As Thailand is a major oil importer, it will certainly be impacted by rising oil prices. Therefore, the situation is worrisome and should be closely monitored,” Chaichan said.
The Strait of Hormuz is one of the world’s major oil transportation routes and 21% of global oil shipments pass through that route.
In 2023, nearly 50 per cent of Thailand’s imported energy, including crude oil, natural gas, and refined oil, came from Middle Eastern countries.
A closure of the Strait of Hormuz due to war would seriously affect the country’s crude oil supply, leading to skyrocketing prices. This would affect the industrial production and transportation sectors, resulting in inflation and rising living costs, Poonpong Naiyanapakorn, director of the Trade Policy and Strategy Office at the Ministry of Commerce, said.
The Strait of Hormuz is also a crucial channel for distributing Thai products to Middle Eastern countries. Most Thai goods are transported through the Strait of Hormuz to the port city of Jebel Ali in the United Arab Emirates.
Thailand’s exports to 15 countries in the Middle East were valued at $11.167 billion in 2023, with a growth rate of 1.6% compared to the previous year.
Given this information, the Middle Eastern market is crucial for Thailand’s exports, necessitating close monitoring of the ongoing Iran-Israel conflict and its potential impacts.
If the war escalates, it could affect the Thai economy both directly and indirectly, Chaichan said.