Kloyta Na Thalang explains why Thailand has to base its oil prices on Singapore.

Kloyta Na Thalang, a senior executive at Bangchak Corporation, explained on 29 March why Thailand bases its oil prices on Singapore’s market, addressing a frequent question among Phuket consumers. She stated that oil is a globally traded commodity, and setting prices independently would distort the market, as cross-border movement of oil links Thailand to international pricing benchmarks.

How Singapore Became Asia’s Oil Price Benchmark

Singapore serves as the regional hub for refined oil trading, with prices referenced through the Mean of Platts Singapore (MOPS) index. This benchmark reflects the daily average of actual transactions in Singapore’s active oil market, involving refineries, international traders, and oil companies.

The high trading volume in Singapore ensures that MOPS prices represent real supply and demand in Asia, not speculative estimates. Most Asian countries—including Japan, South Korea, Taiwan, Malaysia, Vietnam, and the Philippines—also use Singapore’s prices as their reference for fuel imports and exports.

Impact on Retail Prices in Thailand

Retail fuel prices in Thailand include additional components beyond the Singapore benchmark, such as excise tax, value-added tax, and contributions to national energy funds. These domestic policies account for differences in pump prices between Thailand and its neighbors, even when the same regional benchmark is used.

If Thailand set prices below global levels, producers would export more oil, causing domestic shortages. Conversely, higher prices would encourage imports and capital outflow. This interconnection makes it impractical for any one country to set oil prices in isolation.

Source: https://www.posttoday.com/business/740110