How U.S. Strikes on Iran Could Impact Thai Economy

On June 22, 2025, U.S. military forces conducted precision strikes on three Iranian nuclear facilities—Fordow, Natanz, and Isfahan—escalating tensions in the Middle East. While Thailand is geographically distant from the conflict, the ripple effects of this geopolitical event could significantly influence its economy, particularly through energy markets, trade, tourism, and investor sentiment. As a net oil importer and a trade-dependent nation, Thailand must brace for potential economic turbulence.

The most immediate concern for Thailand is the potential spike in global oil prices. Iran, a key OPEC member, plays a critical role in global oil supply. Although the U.S. strikes targeted nuclear sites, fears of retaliatory actions, such as Iran disrupting shipping in the Straits of Hormuz, could constrict oil flows. Reuters reports that attacks on Iranian energy infrastructure have already fueled concerns about oil production shutdowns. For Thailand, which imports over 80% of its crude oil, a sustained increase in Brent crude prices—potentially exceeding $100 per barrel—would raise fuel costs, driving inflation. This could strain household budgets and increase production costs for industries like manufacturing and logistics, eroding competitiveness.

Thailand’s export-driven economy, contributing nearly 60% to GDP, faces risks from disrupted global trade. The Middle East is a significant market for Thai goods, including automobiles, electronics, and agricultural products. Escalating conflict could dampen demand in the region, particularly if economic sanctions or retaliatory measures disrupt trade routes. Additionally, global supply chains, already fragile, could face further strain if shipping costs rise due to heightened risks in the Persian Gulf. Thai exporters may struggle to maintain margins, especially for low-value goods like rice or rubber.

Tourism, a cornerstone of Thailand’s economy, is another vulnerable sector. In 2024, Thailand welcomed over 35 million foreign visitors, generating 12% of GDP. A prolonged Middle East conflict could deter tourists from conflict-adjacent regions, including Gulf countries, which account for a growing share of arrivals. Moreover, global economic uncertainty may reduce travel from key markets like Europe and the U.S. A decline in tourist spending would hit small businesses, hotels, and the service sector, exacerbating unemployment in tourism-dependent regions like Phuket and Chiang Mai.

Investor confidence could also waver. Thailand’s stock market, sensitive to global shocks, may see capital outflows as investors seek safe-haven assets like gold or U.S. treasuries. The baht, already volatile, could depreciate if oil prices surge, increasing import costs and potentially prompting the Bank of Thailand to tighten monetary policy. Higher interest rates would dampen domestic consumption and investment, slowing growth projections for 2025, currently estimated at 2.8–3.2%.

However, opportunities may emerge. Thailand’s energy sector could accelerate investments in renewables to reduce oil dependency. Additionally, diplomatic neutrality positions Thailand to mediate or maintain trade ties with Middle Eastern nations, potentially offsetting losses.

To mitigate risks, Thailand’s government should secure alternative oil supplies, possibly from ASEAN partners or Russia, and bolster fiscal stimulus to support SMEs. The Bank of Thailand must monitor inflation closely, balancing growth and stability. While the U.S.-Iran conflict’s full impact remains uncertain, proactive measures can shield Thailand’s economy from the storm ahead.