HANOI: Vietnam’s swift and coordinated policy response to the Middle East conflict, from flexible fuel pricing to efforts to diversify supply sources and energy diplomacy, has highlighted the country’s capacity for strategic adaptation in an increasingly volatile global economic landscape.
As the Middle East crisis sends shockwaves through global energy markets, disrupting tanker traffic through the Strait of Hormuz and keeping crude oil prices hovering around US$100 per barrel, many countries have begun introducing emergency measures like fuel price controls, export restrictions and energy-saving campaigns.
Through a series of rapid moves Vietnam has managed to stabilise the domestic fuel market, keeping supply uninterrupted while minimising negative impacts on economic growth, business operations and consumption.
According to the Industry and Trade Ministry, domestic fuel supplies remain largely secure, to date.
The ministry reported that output at the Dung Quat refinery has risen by 10.5% and has sufficient feedstock to sustain production through early May, while the Nghi Son refinery has enough input materials to maintain operations through the end of April.
These two refineries currently cover about 68% of the domestic demand.
After the latest adjustment on March 25 with the price stabilisation fund tapped, the domestic petrol prices are now around the regional average and remain lower than those in several neighbouring countries.
Without having to apply strict administrative measures such as purchase limits or widespread hard price caps, this reflects the effectiveness of Vietnam’s flexible policy approach, combining market-based mechanisms with targeted stabilisation tools to navigate external shocks, according to the ministry.
Responding to new developments of Middle East tensions, the government has stepped up energy diplomacy, holding phone talks with leaders of several countries while also meeting with ambassadors from countries including Japan, Kuwait, Qatar, Angola and the United Arab Emirates to secure stable energy supplies.
The recent visit of PM Chinh to Russia also placed strong emphasis on enhancing cooperation in energy, and oil and gas.
The preferential import tariffs for petrol have also been slashed to zero under a resolution issued on March 9, allowing Vietnamese importers to seek additional suppliers from markets that do not yet have free trade agreements with Vietnam.
Amid volatile global oil prices, Vietnam in March adopted a more flexible approach to domestic fuel price management which allows immediate adjustments if the base price rises by 7%, instead of awaiting a seven-day cycle. The thresholds for fuel price adjustments on March 19 were lifted to 15% increase or more and 10% fall or more of the base price.
Another key policy tool is the reactivation of the fuel price stabilisation fund from March 10, which has remained idle since 2023.
Tran Huu Linh, director of the Domestic Markets Management under the Industry and Trade Ministry, said the flexible pricing mechanism combined with the use of the fuel price stabilisation fund had helped maintain market stability.
However, Linh noted that with the balance currently standing at just over 5.6 trillion dong, the fuel price stabilisation fund could only be used to support the market for about 15 days at the current spending rate.
The Finance Ministry has recently proposed the environmental protection tax be halved to 1,000 dong for petrol and 500 dong for diesel, which would, if approved, allow retail prices to drop correspondingly.
The crisis has highlighted deeper structural vulnerabilities in Vietnam’s energy system as a net importer of fuels.
Data from the Department of Customs show Vietnam imported about 9.9 million tonnes of refined petroleum products last year, worth more than US$6.8bil.
Imports of liquefied petroleum gas totalled US$2.2bil and crude oil US$7.7bil.
The reliance on imports highlights the urgency of boosting national strategic oil reserves and building a long-term energy self-reliance strategy, especially as Vietnam aims for double-digit growth. — Viet Nam News/ANN
