Foreign investors are fleeing Thailand, sending the baht to multi-year lows as an energy shock from the U.S.-Israeli war on Iran snuffs out hopes for an economic revival and exposes policy paralysis in Bangkok.
"We're going to see energy prices high - and maybe even rising - until we get meaningful ship traffic through the Strait of Hormuz," Chris Wright, U.S. Department of Energy Secretary, told the Semafor World Economy Forum in Washington. "That'll probably hit the peak oil price at that time. That's probably sometime in the next few weeks."
The geopolitical turmoil initially sent global benchmark Brent crude above $100 a barrel, though prices later eased on hopes for new peace talks. Brent fell about 1 percent to $98.40 a barrel in Asian trade, while U.S. West Texas Intermediate dropped 1.7 percent to $97.40. In contrast, Asian stock markets, which are heavily reliant on Gulf energy, edged higher on the diplomatic hopes, with Japan's Nikkei 225 gaining 2.6 percent and South Korea's Kospi jumping over 3 percent.
The conflict's primary risk to the global economy centers on the Strait of Hormuz, a critical chokepoint through which nearly a fifth of global oil and gas shipments pass. Iran has threatened to attack vessels in the strait in retaliation for U.S.-Israeli strikes, effectively closing the waterway and triggering a surge in energy prices that threatens to fuel inflation and stall worldwide economic growth.
The market volatility comes after negotiations between the U.S. and Iran failed over the weekend. President Donald Trump said Monday that Tehran had contacted Washington about a potential agreement, stating, "They'd like to make a deal very badly."
However, reports from The New York Times, citing officials from both countries, suggest a significant gap remains. Iran reportedly proposed suspending its uranium enrichment for up to five years, an offer the U.S. rejected, insisting on a 20-year suspension. While the discussions in Pakistan suggest a potential path to a deal, the distance between the two sides indicates that a prolonged period of tension and elevated energy prices remains a distinct possibility.
For Thailand, the timing could not be worse. Prime Minister Anutin Charnvirakul's government has struggled to ignite a post-pandemic recovery, and the external shock of higher energy costs and a risk-off sentiment across emerging markets now threatens to derail its economic plans. The sell-off in Thai assets reflects growing investor concern that the nation's economy is particularly vulnerable to the global energy price spike.
This article is for informational purposes only and does not constitute investment advice.
