Thailand Burning Through £22 Million a Day in Diesel Subsidies as Asia's Fuel Crunch Deepens

Thailand Burning Through £22 Million a Day in Diesel Subsidies as Asia's Fuel Crunch Deepens Southeast Asian governments face fiscal exhaustion within weeks as Hormuz-driven supply losses force emergency crude sourcing from Africa and Latin America. Diesel subsidies are costing the Thai government more than 1 billion baht a day. That is roughly £22 million, and officials describe the burn rate as difficult to maintain beyond one to two months. Petrol stations across the country have experienced panic buying. Some shops have put up out-of-stock signs. The Guardian reported purchase limits being introduced as consumers brace for further price increases.⁸ That matters because Thailand is one of several Asian economies now scrambling for crude from suppliers they barely traded with before February. The Economist reported that Thailand wants to buy more oil from Nigeria and Kazakhstan. Vietnam is sourcing from Angola and Argentina. The Hormuz blockade has forced Asia's energy importers to scour markets that were previously marginal to their supply chains, accepting higher freight costs and unfamiliar counterparty risk because the alternative is rationing.³ The biofuels pivot is accelerating under the same pressure. Asian governments are fast-tracking blending mandates and feedstock programmes that had been treated as medium-term aspirations. But The Economist warned that tackling one crisis could exacerbate another: diverting agricultural output to fuel production threatens food supply at a moment when food-price inflation across the region is already acute.³ The macroeconomic damage is spreading faster than the policy response. Inflation in the Philippines jumped to 7.2% in the year to April, while GDP growth in the first quarter of 2026 slowed to 2.8%, the lowest since the pandemic. Bangladesh's factory output is down 30-40%, according to an industry body. Textile factories, which account for around 13% of GDP, report input costs up 10-15% on costlier diesel and petrochemical-based dyes. The price of urea, much of which is manufactured in the Gulf, has risen 50% since the start of the war.⁴ India has capped the aviation fuel price increase for domestic airlines at 25%, even though actual costs have risen by more than 100%. New Delhi may also spend around $4.3 billion on fertiliser subsidies during planting season. The Kiel Institute projects food-price inflation in India, Pakistan and Sri Lanka could exceed 10% this year. The UN estimates a prolonged war could shave up to 3.6% from South Asian GDP.^1,4 South Korea, which relies on the Middle East for around 70% of its crude, has declared an economic emergency. President Lee Jae Myung passed an additional $17 billion budget this week. Spot LNG prices have roughly doubled. Asian LNG imports have fallen sharply in what one report described as the biggest supply disruption since the market's modern formation. Japan and South Korea, the two largest Asian LNG importers, have increased coal-fired power generation to compensate.^1,6 Australia's exposure operates through a channel that is easy to miss. Only around 15% of Australian oil imports cross the Hormuz directly. But the country relies heavily on refined fuel products from Asian refineries, and those refineries depend on the strait for 40-70% of their crude feedstock. When Asian refiners lose input, Australian fuel supply tightens regardless of where Australian crude originates. Only 7% of US oil imports transit Hormuz, by contrast, which explains why the crisis has hit Asia disproportionately.² The Asian Development Bank has announced a $70 billion programme for new energy and digital infrastructure in the region. It includes a pan-Asia power grid initiative connecting national and subregional power systems. The programme predates the crisis but has acquired new urgency. Wood Mackenzie projects Southeast Asian data-centre power demand will quadruple from 2.6 GW to 10.7 GW between 2025 and 2035, reaching 3-4% of peak demand. Surging power needs and collapsing fuel supply are colliding at the worst possible moment.^7,5 The Economist argued that the Gulf war will change Asia for good. Energy-shocked countries are determined never to be held hostage to a single chokepoint again. The structural shifts already underway — biofuel mandates, coal reversion, new crude sourcing from Africa and Latin America, regional grid interconnection — will outlast the crisis.⁴ Thailand's subsidy runway is the number to watch. At a billion baht a day, the fiscal clock runs faster than the diplomatic one. If Bangkok exhausts its buffer before Hormuz reopens, fuel rationing in Southeast Asia's second-largest economy becomes the next headline.