Vietnam is grappling with a sharp fuel price shock, with diesel prices more than doubling in just a month as global oil disruptions ripple through Southeast Asia

HANOI: Diesel prices surged by 105% to 39,660 dong (S$1.92) per litre late Tuesday night, up from 19,270 dong (S$0.93), following a joint decision by the ministries of industry and trade and finance. Petrol prices have also climbed steeply, with 95-octane fuel rising from 20,150 dong (S$0.97) per litre in late February to 33,840 dong (S$1.64).

The spike comes as the ongoing Middle East conflict tightens global energy supplies, pushing oil prices above US$100 per barrel. Analysts estimate that disruptions have affected around 11 million barrels of oil and 140 billion cubic metres of gas daily, sending shockwaves across import-dependent economies like Vietnam.

The broader regional impact is already becoming clear. Across Southeast Asia, countries are grappling with rising fuel costs, weaker currencies, and inflation pressures, as detailed in this report: Southeast Asia braces for fuel shock as war disrupts oil flows.

In response, Hanoi has moved quickly to secure alternative supplies. On March 23, Vietnam signed an oil and gas production agreement with Russia and has appealed to countries including Qatar, Kuwait, Algeria, and Japan for additional fuel support.

Domestically, the government has repeatedly tapped into its price stabilisation fund—drawing from it seven times so far—in an effort to cushion consumers. In the latest round, subsidies of 4,000 dong per litre were allocated for diesel, and 3,000 dong per litre for petrol, kerosene, and mazut, a fuel widely used in industry and shipping.

Further relief may be on the way. The finance ministry has proposed halving the environmental protection tax on fuel, a move that could reduce petrol prices by about 1,080 dong per litre, with smaller cuts expected for diesel and jet fuel.

The impact is now spilling into the aviation sector. Vietnam Airlines will temporarily suspend some domestic flights and cut around 23 weekly services from April 1, according to the Civil Aviation Authority of Vietnam, as tightening jet fuel supplies begin to bite. Budget carrier VietJet Aviation is also scaling back flights on selected routes, reflecting broader pressure across the industry as airlines adjust to rising fuel costs and limited availability.

Despite these measures, the broader economic impact is already being felt. Rising fuel costs have pushed up transport and delivery expenses, driving inflation in food and imports, while also disrupting parts of the tourism sector.

For Vietnam, the surge in energy prices is a stark reminder of its vulnerability to global supply shocks—one that may linger if the conflict drags on. /TISG

Read also: Australia’s fuel crunch isn’t about oil – panic buying is breaking a fragile supply chain