Q1 proves tough for Vietnam's oil and gas giants

Profits for major Vietnamese oil companies dropped significantly in Q1, as global oil prices plunged, driven by U.S. tax policy shifts and the ongoing Russia-Ukraine war.

Profits and stock values both tumble

After showing signs of recovery from a downturn at the end of 2024, the Vietnamese oil and gas market stumbled again in Q1/2025. New U.S. tax policies targeting imports from trading partners raised fears of a potential recession, while the persistent Russia-Ukraine conflict further pressured global markets. These factors contributed to a continued decline in Vietnam's oil and gas sector.

Vietnamese energy firms, including Binh Son Refining and Petrochemical JSC (BSR), Petrolimex (PLX), and PetroVietnam Oil Corporation JSC or PVOil (OIL), saw their financial performance take a hit.

Binh Son Refining and Petrochemical, the operator of Vietnam's first oil refinery Dung Quat, reported a slight year-over-year revenue increase to VND 31.89 trillion (1.22 billion) in Q1.

However, its gross profit margin fell sharply from 4% to 1.1%, and gross profit plunged 70% to VND382 billion ($14.72 million).

Net profit after tax was VND399 billion ($15.37 million), down 64.3% from Q1/2024. Despite the drop, the company returned to profitability after two consecutive quarters of losses.

The company noted that Brent crude oil prices declined from $79.23 per barrel in January to $72.6 in March, in contrast to rising prices in the same period last year. The narrowing spread between crude input costs and refined product prices also eroded profit margins.

Petrolimex, which holds more than half of Vietnam’s retail fuel market, reported Q1 revenue of VND67.86 trillion (2.61 billion), down 9.6% year-over-year.

Its net profit after tax tumbled 81% to VND210 billion ($8.09 million). West Texas Intermediate (WTI) crude prices dropped from $77.8 to $67 per barrel during the quarter, raising the cost of goods sold and forcing the company to set aside additional provisions for inventory devaluation.

PVOIL, the second-largest fuel distributor in Vietnam, saw its profits nosedive, down 89% year-over-year to just VND26 billion ($1 million). There are two key factors that contributed to the steep decline.

Firstly, falling Brent-dated prices drove gasoline product prices down by 7-15% compared to the same period last year and 5-9% versus the 2024 average. While PVOIL's revenue rose, both gross margin and gross profit fell.

Secondly, financial income dropped 31% due to lower bank interest income and reduced foreign exchange gains. Meanwhile, expenses increased due to higher interest payments, exchange rate losses, and investment depreciation provisions.

Stock prices at year-long lows

Following these results, shares of major oil and gas firms have fallen to year-long lows. Since its debut on the Ho Chi Minh Stock Exchange (HoSE) earlier this year, BSR stock has declined 27% to VND16,500 ($0.64) per share, even touching VND14,600 ($0.56), the level last seen in June 2023.

OIL once again dropped below par value to VND9,800 ($0.38) on Wednesday afternoon, down 28% since the end of February.

PLX shares closed at VND33,500 ($1.29) at the same time, marking a 23% decline over the same period. Both OIL and PLX are now trading at their lowest levels in a year.

Oil prices likely to fall further

According to a report by Vietcombank Securities, oil prices are expected to continue falling into Q2.

Trade tensions are dampening demand due to fears of a global recession. On the supply side, OPEC+ has announced a surprise output increase of 411,000 barrels per day starting in May, a sharper rise than anticipated, with a three-month ramp-up.

Additionally, Saudi Arabia lowered its prices of export to Asian markets in May, signaling aggressive competition amid weakening demand.

Brent crude has now fallen to around $61.6 per barrel, the lowest since February 2021 and down 23% since the start of 2025.

In Vietnam, gasoline prices were adjusted 13 times in Q1 by the Ministry of Industry and Trade - eight increases and five decreases.

On average, gasoline prices in Q1 were down 10% year-over-year, tracking global price trends. Vietcombank Securities expects domestic prices, which are closely tied to global markets, to continue declining.

The falling prices not only reduce product revenues and cost of goods sold but also trigger higher inventory devaluation provisions. In Q1, Petrolimex set aside VND334 billion ($12.86 million), while BSR allocated VND381 billion ($14.68 million) for this purpose.

Despite the downturn, Vietcombank Securities forecasts that lower gasoline inventories and temporary refinery closures may improve refining margins, known as the crack spread (the difference between crude oil prices and finished fuel products). This could help improve profitability for gasoline businesses in the coming quarters.