The shift helped the Southeast Asian industrial hub cushion the impact of the Gulf crisis. But it also contributed to an unusual trade deficit for the export-reliant economy and a sharp rise in consumer prices, which jumped 5.46% in April, above the 4.5% target set by the government.
In the March to April period, Hanoi increased its imports of refined oil products by nearly 17% from a year earlier by volume and by 144% in dollar terms, according to a Reuters analysis of Vietnam’s customs data. The country purchased more from Malaysia and South Korea to offset falling fuel shipments from Singapore and China.
Over the two months, South Korea exported nearly as much refined oil to Vietnam as its top supplier Singapore, raising shipments by more than 60% from the same period a year earlier to 610,000 metric tons, one-third of the country’s oil product imports.
Imports of Malaysian oil products nearly doubled to 403,000 tonnes, surpassing China as Vietnam’s third-largest provider of refined oil products.
China export restrictions
Supplies from China fell about 17% in the two-month period, which especially impacted the aviation sector since before the crisis the country depended on Chinese shipments for more than half of its jet fuel needs.
Vietnam won exemptions from China’s fuel export restrictions imposed right after the Iran war began on Feb 28. That allowed fuel deliveries of 189,000 metric tons in the two months, although shipments nearly halved from March to April.
Vietnam’s two refineries have secured crude oil supplies for several more weeks, but “if the war in Iran continues for much longer, the energy situation in Vietnam will be very complicated,” said Nguyen Thanh Son, a Hanoi-based energy analyst who was formerly an executive with state-owned coal miner Vinacomin.
Oil imports slip
Oil imports in March and April slipped 5% from a year earlier as Vietnam was forced to replace supplies from its top provider Kuwait, which are hampered by the closure of the Strait of Hormuz.
Kuwait was still Vietnam’s main crude supplier in March as cargoes shipped before the outbreak of the war were delivered.
But with no Kuwaiti shipments arriving in April, Vietnam turned to other exporters. The country’s largest refinery at Nghi Son, which buys the bulk of the Kuwaiti oil, said it took in supply from the US and Africa. Ship-tracking data provider Kpler reported other imports from the United Arab Emirates and Nigeria.
Imports in May have already exceeded those in the past two months, with new supplies from Oman and Angola, Kpler data shows.
Higher domestic production of crude oil also helped ease the shock, “but the situation will remain difficult,” as output cannot be raised quickly, said Nguyen Quoc Thap, chairman of the Vietnam Petroleum Association.