The next government is being urged to prioritise energy security as rising oil prices linked to the US-Israeli war on Iran raise fears of stagflation, economist and People’s MP Anusorn Tamajai warned. He said the country’s heavy reliance on imported oil leaves its economy vulnerable to supply disruptions and surging energy costs.
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Anusorn cautioned that Thailand and other Asian economies dependent on imported energy could face stagflation, a combination of economic stagnation and high inflation. He said inflationary pressures are likely to increase due to supply-side factors and rising production costs, replacing the recent period of negative inflation caused by weak domestic demand.
The warning comes as crude oil futures in global markets have surged by more than 35% over the past week, marking the largest weekly increase since 1983. Several oil refineries in the Middle East have halted production, while oil facilities in Iran were recently attacked amid the ongoing conflict.
Anusorn, formerly chairman of the Audit Committee and director of Bangchak Petroleum Plc, said new subsidy measures may be required if global crude oil prices again rise above US$120 per barrel. However, he cautioned the government against creating fiscal risks or encouraging inefficient energy use through poorly designed subsidies.
He said subsidising diesel prices through the Oil Fuel Fund mechanism remains necessary, but warned the fund could soon return to negative territory. The fund previously ran a deficit for four consecutive years, reaching 130 billion baht by the end of 2022 before returning to positive territory.
To strengthen long-term energy resilience, Anusorn recommended implementing four key strategies simultaneously: developing a power generation and energy security plan, promoting energy conservation and efficient energy use, expanding renewable and alternative energy projects, and reducing greenhouse gas emissions.
He stressed that improving energy efficiency and conservation is essential as Thailand maintains relatively low energy reserves and remains heavily dependent on imports. Investment in renewable energy, particularly solar power and photovoltaic (Solar PV) systems, would also be critical to ensuring long-term energy security.
The Middle East conflict is expected to have wider regional economic consequences, particularly for East Asian economies reliant on imported energy. Anusorn warned that Japan could be significantly affected, with inflation rising sharply due to higher energy costs.
Japan has long relied on extremely low interest rates to stimulate economic growth and counter deflation. The policy encouraged global investors to borrow yen at very low or sometimes negative interest rates and convert them into other currencies to invest in higher-yield assets, a strategy known as the Yen Carry Trade.
Thainewsroom reported that Anusorn said rising inflation in Japan could pressure the Bank of Japan to increase its policy interest rate. If that occurs, investors may unwind Yen Carry Trade positions, potentially triggering global market volatility as large funds sell risky assets to repay yen-denominated loans. Such developments could lead to continued downward corrections in global financial markets, he warned.
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Adapted by ASEAN Now Thainewsroom 11 Mar 2026