Thailand’s fuel price-stabilization system has been tested again in 2026, as a diesel price shock collided with geopolitical risk and fast-rising international energy prices. IEEFA reported that the Oil Fuel Fund moved from a surplus of THB2.5 billion on 1 March 2026 to a deficit of THB786 million by 8 March, before widening to THB62.4 billion on 26 April. That 26 April deficit included a THB24.1 billion shortfall in the oil account and a THB38.2 billion loss in the LPG account. The speed of the reversal highlighted how quickly a retail price cap can turn into a fiscal stress point when global prices jump.
By late March, the cost of keeping diesel affordable had become visible at the pump. On 24 March 2026, ordinary high-speed diesel was being subsidised by 26.99 baht per litre, up from 24.09 baht per litre the previous day, according to reporting that also put the fund back in deficit at 28.109 billion baht as of 22 March. The same update showed an uneven burden inside the fund: the oil portion was still in surplus at 9.302 billion baht, while the LPG portion remained deeply negative at 37.411 billion baht. This imbalance kept LPG support central to the fund’s structural problem, even as diesel grabbed headlines.
From Emergency Buffer to Exit Strategy: Policy Rewrites in Real Time
Through mid-2026, the deficit deepened as Thailand maintained a policy of cushioning households and businesses from higher retail prices. As of 12 July, the fund was reported to be 58.43 billion baht in deficit, with renewed Middle East tensions cited as a driver of higher crude prices. By September, officials described the fund’s deficit at 80 billion baht while trying to prevent it from reaching 100 billion baht. The Oil Fuel Fund Office said it was spending 770 million baht a day—about 23 billion baht a month—to slow the pace of domestic price increases, with more than 700 million baht per day for oil products and more than 10 million baht for LPG.
The political economy of subsidies became harder as inflation picked up alongside domestic fuel prices. In October 2026, the Energy Ministry weighed an “exit strategy” after the fund’s deficit exceeded 100 billion baht. Daily subsidy payments were scaled back from a high of 700 million baht to around 375 million baht to slow cash outflow, while proposals awaited approval, including increasing refinery-gate discounts, cutting the diesel excise tax, and securing new government-guaranteed loans. In the same period, Thailand’s headline inflation reached 2.82% year on year in September 2026, and the average inflation rate for January–September 2026 was 1.54% versus the same period in 2025.
Research on the 2026 shock argues that Thailand saw a sharp rise in diesel prices rather than year-round stabilization around THB 30/L, and notes that Oil Fuel Fund Office financial-position statements document substantial negative net positions. The same work cautions that a fossil fuel subsidy estimate of 7.0% of GDP for Thailand in 2024 (from IMF data, as cited) should not be equated with an Oil Fuel Fund deficit, while an IMF Article IV staff report using a narrower concept estimated implicit costs of energy subsidies at about 0.6% of GDP in FY2024. Together, these points reinforce a key policy lesson: the fund’s cash deficit is only one lens, and the broader subsidy debate is now pushing Thailand toward clearer targeting, explicit financing choices, and a more transparent path for adjusting retail prices when shocks hit.
How fast did Thailand’s Oil Fuel Fund swing from surplus to deficit in 2026?
How large was the diesel subsidy per litre during the 2026 crisis?
What drove the fund’s deficit higher in mid-to-late 2026?
What was the reported daily spend from the fund to slow domestic price increases?
What steps were proposed once the Oil Fuel Fund deficit exceeded 100 billion baht?
