"Crude oil prices could rise further as the conflicts are not settled yet. We need to monitor the situation closely as oil prices are sensitive to many factors, particularly the level of output and demand," said Metta Banterngsook, director general of the Energy Policy and Planning Office.

Oil prices retreated ahead of a meeting of the Monetary Policy Committee (MPC) yesterday. The committee maintained its policy rate at 5 per cent, although the US Federal Reserve earlier raised its policy rate to 5.25 per cent.

  The MPC's decision apparently reflects concern that higher rates will erode investment and the debt-servicing ability of firms already reeling from rising oil prices.

The Bank of Thailand pointed to rising oil prices as one of several factors that could lead to lower purchasing power and an economic slowdown that would see the central bank revise its growth forecast for this year.

Yesterday, crude oil fell US$1.59 to $70.70 a barrel in Dubai, while finished petrol was down $1.21 to $87.38 and diesel fell US$1.55 to US$87.16.

Anusorn Sangnimnuan, president of Bangchak Petroleum Plc, said that if prices in Singapore ease over the next one or two days, it was possible domestic retail prices could be cut. "There is higher possibility for the cut in diesel prices as the marketing fee is now at 90 satang per litre against 50 satang for petrol," Anusorn said.

Withaya Wangchitrarak, senior executive and vice-president of PTT Plc, said that if crude prices keep retreating, retail prices could be cut on Friday. "Still, the situation is not clear enough to gauge if the retreat will continue," he added.

A source from the Energy Ministry said that high oil prices might force the ministry to adjust the national energy strategy. The strategy would be revised to focus on reducing fuel consumption and speeding up development of alternative fuels.