The Shock of Middle East War on Thailand
Looking at the issue from a different country’s perspective. I have worked in Thailand for weeks at a time at several plants the company had near Bangkok and Phitsanulok If you have not been, Thailand is a friendly country. It does have a degree of poverty which will catch your eye in the cities. It is interesting and there are many places to explore.
The closure of the straits will impact Thailand’s economy in time. If it is just 30 days, it may not be a major issues. That all depends upon Iran and how they feel about the West. In which case, many countries will suffer because Trump and Israel wish to punish Iran. Different opinions in this article.
“Easing the shock of war,”
– by Mongkol Bangprapa and Aekarach Sattaburuth
The escalating conflict in the Middle East, particularly the looming threat of a blockade of the Strait of Hormuz, is casting a long shadow over the economy.
While short-term impacts concern tourism, exports, and energy prices, experts warn that the country faces a significant “structural shock” if the conflict prolongs beyond a few weeks.
Energy and inflation woes
The conflict’s immediate repercussions have been felt in rising energy prices, particularly natural gas in Europe, which has nearly doubled. However, academics and entrepreneurs are more concerned about the potential for a deeper, long-term structural shock.
If the conflict persists for three to four weeks, the combined pressure of inflation and increased transport costs will present a formidable challenge for the government, demanding more than just short-term solutions.
Thailand’s reliance on the Strait of Hormuz for a substantial portion of its energy imports, including crude oil and natural gas for electricity generation, makes it vulnerable.
As Nonarit Bisonyabut, a research fellow at the Thailand Development Research Institute Foundation (TDRI), points out, any disruption to the vital shipping lane would inevitably cause a surge in domestic living costs due to skyrocketing energy prices. The burden would fall heavily on the public as long as the conflict continues.
Mr Nonarit outlines two scenarios for the conflict. The first involves a relatively short engagement of around 40 days, as anticipated by the United States.
“However, the more alarming prospect is a ‘guerrilla war’ characterised by drone or missile attacks targeting critical infrastructure like oil tankers or gas pipelines,” he said. Such a scenario would lead to sustained global inflation, remaining elevated for an extended period.
Assoc Prof Somjai Phagaphasvivat, an independent academic in economics and politics, concurs that while oil prices have seen some upward movement, it is primarily a temporary effect stemming from the “will-be-but-isn’t-yet” closure of the Strait of Hormuz.
Shippers are re-routing to avoid the perceived danger zone, leading to higher transport costs rather than an actual shortage of oil.
He points out that global oil demand is some 104 million barrels per day, while production capacity stands at 108 million barrels per day, leaving a surplus of 3–4 million barrels. So, unless major refineries in countries like Saudi Arabia are permanently damaged, the structural integrity of global oil prices is unlikely to be severely affected.
He also believes that a full closure of the Strait of Hormuz would not benefit Iran or its allies, as it would disrupt the global economy on such a broad scale that Iran would find itself on the defensive.
He anticipates international pressure would lead to a swift resolution within three to four weeks to prevent further damage to the global economic structure.
‘Snowball effect’ on consumption
Mr Nonarit highlights the “snowball effect” of uncertainty on financial markets. Stock markets typically react negatively, with panic selling pushing prices down. This makes asset owners feel “poorer”, leading to a broader slowdown in consumption.
The fear-driven behaviour extends beyond investors to the wider public. When people receive news about future risks, they save money to cope with uncertainty. “The fear function gradually erodes domestic economic activity, even if Thailand is not directly affected by the conflict,” he said.
The situation also affects Thai workers in conflict zones. Although their remittances may not represent a major share of national income compared with tourism, they are a vital component of the grassroots economy (micro economy). If the conflict escalates to the point of evacuation or job suspensions, household incomes could shrink and further weaken the country’s economic activity.
Mr Nonarit also sees opportunities for agricultural products and food during the crisis. Wartime conditions often trigger abnormal hoarding of consumer goods. If Thailand manages exports effectively, processed food and medical supplies could experience rising demand, while high-tech and electronics sectors may slow due to declining global purchasing power.
He proposes redefining national security from accumulating weapons to building “livelihood security”.
This requires a rapid assessment of food and energy reserves to ensure sufficiency, particularly as global conflict indices have steadily increased over the past decade. The government, he noted, can no longer rely solely on traditional measures such as requesting price reductions from the private sector.
He also advocates structural reforms, including accelerating clean energy and electric systems (EV/renewable) to reduce dependence on foreign oil. The government must also introduce mechanisms to “lower electricity prices” to support manufacturing and ease household burdens, thereby strengthening the country’s resilience to a crisis that could extend for three to six months.
“The government should prioritise preventing price gouging and hoarding during the crisis. Strict regulations and severe penalties are crucial,” he said.
Safe destination’ status
Nithee Seeprae, deputy governor for marketing communications at the Tourism Authority of Thailand (TAT), said many foreign tourists were stranded in the South after airspace closures, particularly in destinations such as Phuket, Krabi and Phangnga.
Authorities, including the Ministry of Tourism and Sports, tourist police and tourism associations, have been assisting affected travellers.
Mr Nithee identified two main groups requiring urgent support. The first includes tourists unable to travel to Thailand or those stranded and forced to extend their stays.
The TAT has coordinated with the Thai Hotels Association (Southern Chapter) and tourism operators to waive cancellation fees and offer special accommodation rates to ease the financial burden.
The second group comprises travellers seeking to return home. The TAT is working with airlines to ease departures as many carriers have rerouted flights to avoid conflict zones in the Middle East. The agency is also urging airlines to reduce or waive flight change fees.
Although the number of stranded tourists remains manageable, flight cancellations have been substantial. Suvarnabhumi Airport recorded 49 cancellations, while Phuket had 14, Krabi three and Chiang Mai International Airport one, totalling 67 flights across inbound and outbound routes.
“Many are adopting a wait-and-see approach, leading to a slight downturn in tourist numbers in the short term,” Mr Nithee said.
Security monitoring has also increased in areas with significant Israeli communities, including Pai district in Mae Hong Son and Koh Phangan in Surat Thani, alongside heightened patrols around embassies. He said Thailand’s priority is to reassure global travellers that the country remains a safe and well-managed destination during the crisis.
Alternative markets
Adith Chairattananon, honorary secretary-general of the Association of Thai Travel Agents (ATTA), said flight disruptions across the Middle East are directly affecting tourists from Europe, the United States and the Middle East itself. However, he said the current period of Ramadan has partly softened the impact, as travel from Arab markets normally declines during the fasting month. Mr Adith indicated that forward bookings for June and July remain normal, but cancellations in March and April are a concern.
Nearly all bookings for those months have been abandoned as travellers reassess the risks of airspace closures and a potential escalation of the conflict. The uncertainty is also affecting travel plans for Thailand’s Songkran festival in April. ATTA members are coordinating with airlines and the Ministry of Tourism and Sports to assist stranded travellers.
Authorities are also considering financial assistance for affected tourists, with a proposal to provide compensation for accommodation and expenses at about 2,000 baht per day in order to protect Thailand’s reputation as a hospitable destination.
Mr Adith warned the main challenge will be attracting “new tourists” in April, particularly from long-haul European markets where travellers usually book trips two to four weeks in advance.
“Consequently, the tourism industry must now focus on short-haul markets in the Asia-Pacific region,” Mr Adith said.
He also expressed concern over rising travel costs. Although East Asian markets such as China, South Korea and Japan are not directly affected by flight route disruptions, a sharp increase in global oil prices could force airlines to raise fuel surcharges and ticket prices. Such increases could weaken the purchasing power of Chinese visitors, a key market that has only recently begun to recover.
Mr Adith believes there is a silver lining. If Asian travellers cannot visit Europe or the Middle East, Thailand could benefit as a strong short-haul destination.
Bangkok Post, “Easing the Shock of War”