Cambodia’s Fuel Import Ban Shakes Thai Energy Sector Amid Rising Border Tensions

Thailand’s energy sector is reeling from Cambodia’s abrupt decision to ban all fuel and gas imports from its neighbor, a move announced by Cambodian Prime Minister Hun Manet on June 23, 2025, amid escalating border disputes. The ban, which halts a critical trade flow valued at nearly 48 billion Thai Baht (US$1.34 billion) annually, has sent shockwaves through Thai companies and raised concerns about broader economic and diplomatic fallout in the region.

A Significant Blow to Thai Exports

Cambodia has long been a key market for Thai fuel exports, ranking as the second-largest destination behind Singapore. In 2024, Thailand exported 2.29 billion liters of fuel to Cambodia, averaging 6.25 million liters per day, according to Thailand’s Ministry of Energy. This trade, which includes petrol and liquefied petroleum gas (LPG), accounted for 21.1% of Thailand’s total fuel exports, underscoring the depth of economic interdependence between the two nations.

Major Thai oil and refining companies, including PTT Oil and Retail (OR), PTT, IRPC, Susco, Thai Oil, and Star Refinery, are directly affected by the ban. OR, a subsidiary of PTT Public Company Limited, operates under PTT Cambodia Ltd (PTTCL) and manages 190 petrol stations and 258 Café Amazon outlets across key Cambodian cities like Phnom Penh and Siem Reap. The company had previously outlined ambitious plans, including a US$100 million investment (approximately 3 billion Thai Baht or US$84 million) to build an LPG terminal and expand oil storage capacity in Cambodia as part of its “second home market” strategy. Those plans now hang in the balance.

A source from PTT, speaking to Thai media, indicated that OR is closely monitoring the situation and has activated contingency measures. For now, operations at petrol stations and Café Amazon branches in Cambodia continue using existing stock at depots. However, the source acknowledged that once reserves are depleted, the impact could intensify. As a precautionary measure, Thai employees in Cambodia were instructed to return home starting June 22, 2025, though most of OR’s workforce in the country—nearly 100%—consists of local Cambodians who will sustain operations with remote support from Thailand.

“Our business operations have always been conducted in good faith. We’ve created jobs, careers, and income for Cambodians. There is no hostility between us” said the PTT source, emphasizing the company’s positive ties with local communities.

Diplomatic and Economic Ripples

The fuel ban comes against a backdrop of heightened border tensions, though specifics of the dispute remain unclear. Thai Prime Minister Paetongtarn Shinawatra addressed the issue, affirming the government’s commitment to supporting Thai businesses operating in Cambodia through diplomatic channels. She noted that no violence has been reported so far, framing the import suspension as a border-related matter. However, she cautioned about potential consequences if the situation escalates or if Cambodia refuses further fuel shipments.

“Cambodian leaders must set oil prices themselves. If they stop accepting Thai oil, prices could surge, and that will impact Cambodian citizens and Thai nationals residing in Cambodia” said Shinawatra, highlighting the risk of economic strain on both sides.

Beyond the energy sector, other Thai businesses are reassessing their strategies in Cambodia. Thapanee Techajareonvikul, executive vice-chairwoman of Big C Supercenter Plc, part of the BJC Group, announced that the retailer has shelved plans to open new branches in Cambodia for 2025–2026. Big C, which currently operates 20 stores in the country, including one large-format and 19 small-format outlets, is prioritizing stability over expansion. The company has contingency plans in place, such as backup generators, drawing from past experiences with power instability in the region.

“The decision to pause expansion in Cambodia is in line with our approach in Laos, where no new openings are planned either. We are focusing on Vietnam, where we already have 20 stores, and we’re studying potential entry into Indonesia” said Techajareonvikul, signaling a strategic pivot to other Southeast Asian markets.

Cambodia’s Push for Economic Independence

Analysts view Cambodia’s fuel ban as part of a broader effort to reduce economic reliance on Thailand, a trend that has been unfolding over the past decade. Assoc Prof Aat Pisanwanich, an expert in international and ASEAN economics, pointed out that Thailand’s market share in Cambodia has declined from 50% to 30% in recent years, with imports of goods like food, auto parts, and construction materials increasingly sourced from China and Vietnam.

“Thai investors in Cambodia aren’t number one—they’re number nine. China ranks first, followed by Malaysia, Singapore, and Vietnam. Thailand comes after that” said Pisanwanich, underscoring the shifting dynamics of foreign investment in the country.

Oil constitutes 16% of Thailand’s exports to Cambodia, with the latter importing 60% of its fuel needs from Thailand. The remaining supply is split between Vietnam and Singapore, and experts anticipate that Cambodia will now lean more heavily on these alternative sources. While a short-term fuel shortage may occur over the next month or two as supply chains adjust, Pisanwanich predicts that Vietnam and Singapore will fill the gap in the longer term.

Cambodia’s move to diversify its trade partnerships reflects a strategic intent to assert greater economic autonomy. Over the years, China has emerged as a dominant player in Cambodia’s economy, with significant investments in infrastructure and industry under initiatives like the Belt and Road. Vietnam, too, has deepened trade ties, particularly in agriculture and energy. For Thailand, this shift represents not just a loss of market share but a challenge to its historical role as a regional economic powerhouse.

Impact on Thai Companies and Regional Trade

For Thai energy giants like OR and PTT, the immediate focus is on mitigating losses. OR’s operations in Cambodia, while significant, are modest compared to its domestic network of over 2,000 service stations in Thailand. Between January and April 2025, Thailand exported refined oil worth 20 billion Thai Baht (US$560 million) to Cambodia, alongside monthly shipments of 150 million liters of fuel and 1,500 tonnes of LPG. The sudden halt in trade threatens to disrupt revenue streams and could force companies to redirect exports to other markets, a process fraught with logistical and financial challenges given the volatility of global energy prices.

The broader implications for Thai-Cambodian trade are equally concerning. Thailand has historically been a major supplier of goods and services to Cambodia, but the declining market share signals a reconfiguration of regional trade networks. As Cambodia pivots toward other partners, Thai policymakers and businesses must grapple with the reality of diminishing influence in a neighboring market once considered a reliable partner.

Looking Ahead: Challenges and Opportunities

As the fuel ban takes effect, questions loom over its sustainability and the potential for resolution through dialogue. For Cambodia, securing alternative fuel supplies from Vietnam and Singapore may stabilize the situation in the medium term, but short-term disruptions could strain domestic energy access and drive up costs for consumers. For Thailand, the ban is a stark reminder of the fragility of cross-border trade in the face of political tensions.

Diplomatic efforts will be crucial in de-escalating the situation, with both governments likely to seek a balance between national interests and economic pragmatism. Meanwhile, Thai companies are bracing for uncertainty, with contingency plans in place but no clear timeline for resolution. As the region watches closely, the unfolding dynamics between Thailand and Cambodia could set a precedent for how border disputes intersect with economic policy in Southeast Asia.