Global oil prices have recently surpassed $100 per barrel, driven by ongoing tensions in the Middle East. This spike is exerting significant pressure on domestic markets in Vietnam, especially as several tax relief policies are set to expire at the end of September. Businesses are now faced with the dual challenge of managing rising costs while ensuring adequate supply to cope with potential market shocks.

As of September 10, the price of E5RON92 gasoline rose to 23,744 VND per liter, an increase of 965 VND, while E10RON95 reached 24,239 VND per liter, up by 1,258 VND. Diesel prices also increased by 742 VND, bringing them to 28,485 VND per liter. These adjustments come despite the government’s intervention to stabilize prices through the use of a price stabilization fund.

The primary driver of these increases is the international oil market. Brent crude oil has seen a significant rise since early August, fueled by geopolitical tensions, particularly between the U.S. and Iran, as well as attacks on oil tankers and risks in the Strait of Hormuz. Le Trung Hung, Deputy General Director of the Vietnam Oil and Gas Group (PVOIL), noted that the current state of the global oil market is highly unpredictable. The pressures come not only from rising crude oil prices but also from the costs of refined oil products on the international market.

Hung emphasized that oil companies are facing risks on both sides. If prices continue to rise, sourcing costs will increase, leading to greater pressure to secure supplies. Conversely, if companies import at high prices and the market suddenly shifts downward, they could quickly face significant losses due to unsold inventory. He expressed concerns that if prices rise and then drop suddenly, companies could find themselves in a precarious financial situation.

The unpredictability of the market is largely attributed to geopolitical factors. Ongoing tensions in the Middle East, the situation in the Red Sea, and potential transportation disruptions could severely limit supply and cause prices to spike again. However, positive signals regarding negotiations could lead to a rapid decrease in prices.

PVOIL is preparing multiple scenarios for the upcoming period, considering various strategies depending on whether prices continue to rise, stabilize at high levels, or decrease sharply. The company is also aware that the tax incentives currently in place, which help mitigate price pressures, will expire in less than three weeks.

Petrolimex reported a stabilization fund balance of approximately 1.074 trillion VND before the price adjustment on September 10. In contrast, PVOIL's fund was negative by more than 1.616 trillion VND as of September 3. The expiration of tax incentives for some fuel products at the end of September is expected to increase pressure on domestic retail prices.

Industry leaders have indicated that with Brent crude prices exceeding $100 per barrel, the likelihood of increased retail prices in Vietnam is high. They are considering this factor in future operational scenarios. If prices remain high, it will be difficult to raise taxes without further burdening consumers. Conversely, if prices decrease, the sustainability of such reductions will need to be assessed, as geopolitical tensions could quickly reverse any gains.

Phạm Văn Bình, Deputy Director of the Price Management Department at the Ministry of Finance, stated that authorities are closely monitoring the oil market to respond appropriately. Adjustments to tax policies post-September will be evaluated based on market developments and inflation control needs. The process for policy review could be expedited to address new market fluctuations effectively.