War never mercy on anyone.

Accepting the condition of the oil crisis, making it "expensive for the whole world"

Thai Rath Edition

14 Mar. 2022 07:00

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The high oil crisis that has haunted Thai people since the end of 2021, with crude oil prices rebounding from demand that has started to return after the quarantine situation in many countries, in contrast to the low OPEC oil inventories. The best in 15 years

When the Russo-Ukrainian war came into being as a catalyst to aggravate

Oil prices hit New Highs, Brent crude futures peaked at $139.

Its highest price in 14 years was set at $147 in 2008 after the United States and the West imposed sanctions on Russia, the world's third-largest producer, affecting Russian oil exports.

The concern that follows is that in every war, whether it is the Indochina War,

Persian Gulf War, Iraq War, etc. The high oil problem will come first, followed by the economic recession every time.

This is in line with what the International Monetary Fund (IMF) has said is likely to lower its economic growth forecasts.

From an estimate in January 2022 that the world economy will grow 4.4% this year, down from 5.9% in 2020.

while the numbers from Goldman

Sachs estimates that for every $20 increase in oil prices

will affect global economic growth, down 0.30%, the United States, down 0.30%, Europe, down 0.60%, Asia-Pacific, down 0.20-0.80%, and Thailand, down 0.10%.

Amid the volatility in the upward trend in oil prices, the government of Gen. Prayut Chan-ocha, which announced that diesel fuel prices were held at 30 baht per liter, as well as the price of cooking gas (LPG) at 318 baht per tank, including Asking for cooperation in 18 important groups of products, ranging from instant noodles, beverages, chemical fertilizers, animal feeds, not to raise prices.

And then convulsions

"can't take it"

, signaling to

"make up"

after the money used to subsidize energy prices starts to deplete ?

Starting from the price of cooking gas, the price will be adjusted to the level of 333 baht per tank from April 1, 2022 onwards, from the actual price must be at 463 baht per tank. An increase in the price of 15 baht per tank is considered a certain level of burden reduction. already

As for the price of diesel, it is expected to be fixed until May, while the electricity cost will wait to see how much it will increase on March 16.

Excluding the price of another 18 groups of products that the Ministry of Commerce asked for cooperation to freeze prices until the end of April.

consistent with that Mr. Supattanapong

Panmeechaow, Deputy Prime Minister and Minister of Energy announced at a press conference at the end of last week that

I want people to help save money and "self-reliance"

Back in 2008, during the reign of Gen. Surayut Chulanont as Prime Minister.

In an era where diesel fuel prices hit a record high at 44.24 baht per liter and gasoline at 42.89 baht per liter, many Thai families in that era had to park their cars at home.

Stop using....

.....As for today

Where will the situation go?

Please follow and read from the report of

"Economic team" this week....

Kewalin Wangpitchayasuk

Kewalin Wangpitchayasuk

Deputy Managing Director, Kasikorn Research Center Company Limited

The war between Russia and Ukraine, which erupted on February 24, 2022, was followed by the introduction of economic and financial sanctions against Russia from Western-led countries.

Even now it is unclear when and how it will end.

will result in energy prices

(oil and natural gas) and various commodities

Both food raw materials and industrial metals (wheat, chemical fertilizers, neon, palladium, etc.) are likely to remain high during most of 2022.

This is because both Russia and Ukraine are among the top producers and exporters of these categories in the world.

In addition, bottlenecks in the supply chain that were originally starting to ease somewhat due to the Covid outbreak situation.

The ongoing war has put pressure on the problem to become more severe and chronic.

However, although the two nations would eventually be able to negotiate and end the conflict between them.

But sanctions against Russia may not be immediately lifted.

And to recover the country from the damage of Ukraine will take time.

Whereas it is difficult to find a replacement product from another source or another product in a timely manner.

Additionally, the global economy has been traumatized and is expected to expand at a slower-than-expected pace.

For the Thai industrial sector, which imports energy and many commodities to use as raw materials and support operations.

would be affected

especially in a situation where business sales have not fully recovered.

Since the Thai economy is just beginning to recover from the Covid situation, it is different from the major economies.

that has clearly recovered for a period of time

together with the direction of the baht that tends to depreciate against the US dollar

At least the first half of 2022 is also a factor that increases the cost of imports.

The industry is expected to be affected by rising energy and commodity costs.

as well as bottlenecks in the supply chain, including:

Groups with a high proportion of energy costs such as oil in production and transportation factors, such as transportation (more than 50%), fishery, mining (35-40%), electricity, retail and wholesale (15-20%), especially from the cost of oil. Gasoline rose in line with world crude oil prices.

The manufacturing sector that uses a large proportion of food raw materials and industrial metals such as food and beverages such as livestock (animal feed), vegetable oil, bakery, beer, vegetables and fruits (chemical fertilizers), etc., as well as automobiles.

electronics and electrical appliances

building materials packaging

In addition to raw material costs and transportation costs that tend to stand at a high level,

Entrepreneurs in various industrial sectors

may also face other cost challenges

which has a chance to adjust up in the future as well

whether the cost of labor

The related parties are in the process of reviewing the minimum wage rate and financial costs.

According to the tendency to raise interest rates of various national central banks

to maintain inflation stability

Although the Thai authorities are likely to maintain the policy rate as long as possible

amid rising cost pressures in each industry

Ultimately, consumers may inevitably be affected by the cost of living through rising levels of prices for goods and services.

This would depend on the ability to bear the cost of each operator that will be able to do much.

as well as the competitive conditions in the market

in some businesses

The trader may have to sacrifice margin or even loss in exchange for sales to have liquidity in the business.

But probably not every business can do that.

or can be done for a long time

As for the result of an increase in world crude oil prices that pushed up domestic oil prices,

Kasikorn Research Center

Preliminary estimate that every 1 baht / liter of gasoline prices increase

It could have a net effect on the Thai economy of about 0.1% to GDP. However, the impact on each sector may differ in proportion to its dependence on oil consumption and flexibility to adaptation.

Chayavadee Chai-anan

Chayavadee Chai-anan

senior director

Corporate Communications Department

Bank of Thailand (BOT)

Global energy prices have been rising for some time due to economic recovery in many countries in the world.

especially the main economic groups

and the latest conflict between Russia and Ukraine

This causes the price of crude oil and some commodities to rise further.

This is because both countries are the main producers of crude oil.

and commodities

“The sanctions situation is still protracted.

This year, the average crude oil price for the year is expected to reach more than $100 per barrel, nearly 45% from last year.

Mainly from higher energy prices.

In addition, the price of some fresh food has increased in the past, such as the price of pork, which has contributed to the increase in the price of other meats and the price of ready-to-eat food.

but has not increased to a large extent

Therefore, the headline inflation rate in 2022 is expected to be higher than the BOT's previous projection in December of 1.7%. this

and will reveal new estimates at the MPC meeting on March 30.”

The conflict between Russia and Ukraine will increase the cost of living and inflation in many countries.

including Thailand that will increase as well

from the impacts in four main areas: 1. The result of rising prices of energy and certain commodities

2. The impact of transportation costs that will increase according to the price of oil

3. The price of animal feed is higher.

This may result in the price of fresh food and ready-to-eat food in addition to the previous period and 4. Passing on the cost of operators to the product price that may start to increase.

The rising price of goods and services will affect the cost of living.

especially the low-income households

As this group accounts for 45% of food and beverage consumption compared to 26% for high-income households, the situation must be closely monitored.

“However, Thailand has not yet developed stagflation because the signs of stagflation must include

1. Inflation continues to rise and/or 2. The economy has contracted or has not recovered.

but for Thailand

The increase in inflation came mainly from the prices of energy and ready-to-eat food.

It has yet to see a broad price increase that is not directly related.

And the Thai economy is still growing 2–3% this year, not shrinking.”

Kriengkrai Thiannukul

Kriengkrai Thiannukul

Vice President of the Federation of Thai Industries (FTI)

Conflict between Russia and Ukraine

The longer it is, the greater the pressure on the economy.

and caused the volatility of world energy prices

The price of Brent crude oil as of March 9, 2022 rose to 130 USD per barrel, an increase of 71% from March 2021 and reverted to a price range of 110 US dollars per barrel on On March 11, there was a drop of more than 15%.

At the same time, Russia also stated that

If many countries have banned the import of crude oil from Russia

will result in more volatility in the world oil market

and pressurized crude oil prices to rise more than $ 300 per barrel.

Russia is the world's third largest oil producer after the United States and Saudi Arabia.

5 million barrels of crude oil are exported per day.

and more than half are sent to the European Union (EU).

in terms of natural gas prices

was also severely affected.

Recently, natural gas prices in the EU rose to $3,900 per 1,000 cubic meters for the first time in history.

Russia's natural gas production accounts for 17% of global natural gas consumption and 40% of Western European consumption.

causing the world to face rising energy and fuel prices.

as a result of this war

“If the tensions between Russia and Ukraine escalate,

As a result, world crude oil prices rose to $150 per barrel.

This will create great concern for the Thai economy and inflation.

and will affect the economic recovery of Thailand

which is estimated to grow to only 2.5% or lower

From the inflation rate of Thailand in February 2022, which rose to 5.28%, the highest in 13 years, it shows the overall picture of the price level of goods that has a tendency to increase."

Such cases will affect the overall investment in the country.

Investors may slow down during this period, but on the other hand, investors who have invested in Ukraine or Russia may move more to ASEAN.

If crude oil prices continue to get more pressure

causing the price to continue to rise

Of course, it's not just the Thai economy.

to be affected

but all countries around the world

“The increase in crude oil for every $1 per barrel

will cause the price of finished oil in front of the gas station

increased by about 25 satang per liter.”

Crude oil prices peaked at $147.5 a barrel in mid-2008 amid the impact of the Hamburger Crisis, where crude oil prices today have not crossed their previous peaks.

Therefore, the impact must be monitored and assessed periodically.

especially the sanctions on Russian energy exports.

That will be an important turning point in world energy prices.

economic team

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