FTI suggests oil price surge will hit recovery

The Federation of Thai Industries (FTI) is worried global oil prices may soar to US$100 a barrel, threatening to worsen the inflation rate and economic recovery, now struggling against the impact of Covid-19 in Thailand.

The country is facing higher food prices, notably for pork, resulting from the supply shock.

“The global crude oil prices look likely to approach $100 a barrel and we expect it to reach that level in the third quarter,” said Kriengkrai Thiennukul, vice-chairman of the FTI.

The FTI’s concern stems from Goldman Sachs which has forecast that global oil prices may hit a new record high this year, with the possibility of reaching $100 a barrel.

The federation is monitoring oil prices closely because their rapid increase will affect the industrial sector.

There are currently 45 industries under the FTI.

“Oil is the main operating cost in manufacturing. If its price keeps increasing, it will affect production costs,” said Mr Kriengkrai.

This is just one concern among manufacturers. They are also facing higher prices of some raw materials, a shortage of freight containers for shipping and the prolonged scarcity of semiconductors.

The oil price surge is not good for the global economic recovery, not to mention uncertainties caused by ongoing Covid-19 outbreaks, said the FTI.

The new Covid-19 Omicron variant is still a risk factor for both the world and Thai economies.

Some 7,122 new Covid-19 infections were reported yesterday by the Centre for Covid-19 Situation Administration.

The government needs to continue its efforts to control the spread of the virus and, at the same time, implement short and long-term measures to deal with energy price concerns.

“The government should use more measures to control energy prices. It may need to reduce oil tax and cap electricity prices,” said Mr Kriengkrai.

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