Oil Fund Debt Crisis Looms as Deficit Nears 100 Billion Baht

Thailand's oil and fuel fund faces mounting financial pressure, with its deficit standing near 92,000 million baht and growing by approximately 700 million baht per day. Although global oil prices have begun to decline in recent days, this has not been enough to stabilize the fund's position, and the deficit is expected to exceed 100,000 million baht by late September or early October 2026. The primary cause is the fund's high burden of fuel price compensation amid ongoing Middle East tensions, which continue to keep global energy prices volatile and elevated.

The fund previously borrowed 20,000 million baht from two domestic commercial banks in two tranches of 10,000 million baht each, and has now used all of that money to service debt. The fund still owes approximately 10,000 million baht in principal and must continue paying interest to avoid default. According to Energy Ministry sources, the fund is preparing a new borrowing round under its crisis contingency plan, potentially requiring a credit line of up to 100,000 million baht, though funds would be drawn gradually as needed rather than all at once. The final loan amount and structure will require approval from the Energy Ministry permanent secretary and energy minister, and may also require a Finance Ministry guarantee.

Simultaneously, the fund must consider an exit strategy to gradually reduce fuel price subsidies and slow the drain on its resources. However, cutting subsidies would push retail fuel prices higher, forcing officials to weigh the impact on citizens and determine whether targeted assistance programs would be needed for vulnerable groups. The cabinet-approved energy crisis support plan, extended through 2026, maintains diesel and petrol price caps at 30 baht per liter and has adjusted the price volatility threshold from 5 dollars per barrel per week to 10 dollars per barrel to reflect increased market swings.

Another approach involves expanding biofuel use to reduce reliance on imported oil, though this requires discussions on the pricing structure for biodiesel and ethanol given high domestic feedstock costs. Officials stress that new borrowing is one tool under the crisis plan that requires urgent preparation, while subsidy reduction is an alternative that could ease the fund's burden but would trade off against higher fuel prices and public impact. Final decisions on loan amounts, borrowing structures, and subsidy reduction will come after the Energy Ministry consults with the new management team.