Fuel price surge raises questions over inventories at Vietnam energy majors BSR, Petrolimex, PVOIL

Vietnamese oil refineries Nghi Son and Binh Son will be able to supply enough gasoline in March due to inventories, but supply in April and May will depend on the Middle East conflict situation.

Retail fuel prices in Vietnam were adjusted sharply higher in two rounds on March 5 and March 7. Petrolimex raised gasoline prices from around VND20,000-21,000 per liter to roughly VND27,000-28,000 ($1.06) depending on the grade and region.

The fuel market has been affected by a combination of global factors including tensions in the Middle East, U.S. crude oil inventories, and the continuing military conflict between Russia and Ukraine.

Escalating tensions involving the United States, Israel and Iran since late last week have added to supply concerns. Prolonged conflict could significantly affect global oil supplies, pushing international prices higher. Benchmark Brent crude climbed to about $92.69 per barrel late last week, up more than $20 per barrel in just over a week.

In response, the Vietnamese Government has set up a task force to ensure energy security amid increasingly complex developments in the Middle East conflict. The group will monitor developments and coordinate among agencies to ensure adequate fuel supply for business activities and consumption, while proposing policy measures to the Prime Minister if necessary.

Inventories fall to multi-year lows

Data compiled by The Investor show inventories at major fuel producers and distributors declined significantly in 2025.

At Binh Son Refining and Petrochemical JSC (HoSE: BSR), which operates the Dung Quat refinery in Quang Ngai province, inventories stood at nearly VND12.64 trillion ($480.58 million) at the end of 2025, down nearly VND3.26 trillion from the start of the year. That represents the company’s lowest inventory level since 2021, compared with roughly VND15.5-16.8 trillion during 2022-2024.

At Petrolimex (HoSE: PLX), Vietnam’s largest fuel retailer, inventories fell from nearly VND15.75 trillion to nearly VND14.15 trillion (VND538.08 million) over the same period.

Inventories at PVOIL also dropped from VND3.54 trillion to nearly VND2.8 trillion ($106.38 million), marking relatively low levels for both major fuel distributors in recent years.

Despite rising geopolitical risks, the department of domestic market management and development under the Ministry of Industry and Trade said the country’s two major refineries — Dung Quat and Nghi Son (Thanh Hoa province) — are operating normally and will supply contracted volumes to wholesalers through the end of March 2026.

Cao Hoai Duong, chairman of PVOIL, said under normal conditions, about 80% of the company’s supply comes from the two domestic refineries, with the remaining 20% imported mainly from Singapore and South Korea.

PVOIL has signed long-term supply contracts with domestic refineries and overseas suppliers to secure fuel supply for the Vietnamese market. Following the escalation in the Middle East, the company held discussions with leaders of the Dung Quat and Nghi Son refineries, who reaffirmed their ability to deliver contracted volumes in March as they had prepared sufficient crude inventories.

However, whether supply in April and May can fully meet contractual commitments will depend largely on how the conflict develops.

Efforts to maintain supply

Nguyen Viet Thang, CEO of BSR, said about 30-35% of crude oil feedstock the Dung Quat refinery currently uses is imported, mainly from West Africa, the Mediterranean region, the United States, and partly the Middle East.

If tensions in the Middle East persist, crude prices, surcharges, shipping rates, and insurance costs could continue rising sharply, increasing input costs and financial risks for the company, he said.

Since the beginning of 2026, BSR has raised inventory levels, adjusted production flexibly to match market demand, and diversified its crude sources to prepare for potential disruptions and support its target of double-digit growth.

Under guidance from the trade ministry and Petrovietnam, BSR has signed crude supply agreements with two major U.S. energy companies — ExxonMobil and Chevron — to ensure stable supply and help narrow the Vietnam-U.S. trade gap.

Between March and May 2026, BSR has contracted to purchase about 3 million barrels of imported crude through trading partners, including Qua Iboe, Bu Attifel, Medanito and Palanca Blend grades.

Although these sources are not located in direct conflict zones, geopolitical tensions in the Middle East could still affect shipping schedules, transportation costs, insurance premiums, and maritime safety.

Meanwhile, Dung Quat refinery is expected to receive about 60,000 tons of E100 biofuel from the PetroVietnam Central Biofuels Plant by the end of March to blend into E10 gasoline, helping boost domestic fuel supply at a time when some countries are restricting fuel exports.

Pham Van Vuong, director of PetroVietnam Central Biofuels JSC, said the plant began trial operations on January 20 and produced its first batch of fuel ethanol on February 6.

During the initial trial phase, the plant produced about 470 cubic meters of fuel ethanol and shipped its first batch of 210 cubic meters to BSR on February 12 for blending into E10 RON95 gasoline.

After the testing phase, the facility is expected to optimize operations and reach full capacity from March 20, producing about 60,000 tons of ethanol per year, or more than 5,000 tons per month.

The plant uses mainly dried cassava chips as feedstock, supplied under long-term contracts to ensure stable input materials.

In a global energy market marked by growing uncertainty, domestic production and blending of biofuels at facilities such as the Dung Quat refinery is seen as an important step in strengthening Vietnam’s energy security while advancing the country’s transition toward cleaner fuels.

The Ministry of Finance has proposed reducing import taxes on gasoline products to 0%, due to the conflict in the Middle East.

In a document submitted to the Ministry of Justice for assessment, the finance ministry stated that the conflict in the Middle East has seriously affected the gasoline business in Vietnam and the world. Accordingly, the Strait of Hormuz is currently blockaded by Iran, preventing approximately 20 million barrels of crude oil per day from Middle Eastern sources from reaching refineries, especially in Asia.

The drafting agency also stated that most of Vietnam's imported gasoline products come from ASEAN and South Korea, with the majority of tariffs being 0% under FTA commitments. However, given the global context, purchasing refined gasoline products from these sources will also face difficulties.