Vietnam's Oil Crisis: Reserves Can't Last 2 Months! Raw Material Prices Surge, Local Chinese Merchants Say: Whoever Has Goods Is the Boss

Reporter | Lai Zhen Tao

Editor | Li Yanxia Jin Shan

March 19, Thursday. Early morning, Cao Guoqiang, who was already preparing to rest, was suddenly awakened by a breaking news—“Oil prices have risen again.” The screen displayed an announcement jointly issued by the Vietnamese Ministry of Industry and Trade and the Ministry of Finance, stating that starting from 11 p.m. on March 19, the prices of 95 octane gasoline and diesel would increase by several thousand Vietnamese dong per liter, pushing oil prices above the 30,000 Vietnamese dong mark again.

Before the escalation of tensions in Iran, the price of oil in Vietnam was less than 20,000 dong per liter (about 5.2 RMB), but as most global oil tankers were stranded in the Strait of Hormuz, Vietnam’s oil prices seemed to be roasted on a fire, soaring over ten thousand dong per liter within just a few days, an increase of over 30%. The last time Vietnam’s oil price broke the 30,000 dong threshold was four years ago during the Russia-Ukraine conflict.

Cao Guoqiang is the assistant president and general manager of Asia for Sailun Group, a tire company. The company has factories in Vietnam, Cambodia, and Indonesia, providing supporting services to local automakers nearby.

Initially, expanding into Southeast Asian countries was driven by the pursuit of more favorable tariffs, but with the global oil prices sharply affected by Middle East tensions, his industry was also forced into this storm. He briefly calculated for reporters that since the US-Iran conflict, their freight costs have increased by 20% directly. The prices of polyester canvas and synthetic rubber processed from petroleum derivatives have surged even more dramatically, with weekly increases of 40% to 50%. “Tire production requires these raw materials, with no substitutes available. We have no choice but to buy at these prices, which definitely cuts into profits.”

In recent years, a large influx of foreign investment in electronics, textiles, footwear, home appliances, and auto parts has turned Vietnam into a potential “next global manufacturing hub.” However, after the Middle East conflict erupted, the land’s test has just begun.

Vietnam gas stations do not have long queues, only price hikes

Recently, discussions about oil shortages in Vietnam have been very lively on domestic social media platforms. In some short videos uploaded by bloggers, the oil shortage crisis has become so urgent that motorcycles queue for fuel for dozens of meters, and buses even need people to push them due to lack of fuel…

When the 21st Century Business Herald reporter contacted Chinese people currently in Vietnam, most responses were “No queues at gas stations, fuel is available normally, no shortage.”

Wang Li, general manager of Vietnam First Station Co., Ltd., who has been in Hanoi recently, told the reporter that the short videos circulating online about queues at Vietnamese gas stations might have been filmed at a time when fuel prices were about to rise sharply. Some drivers rushed to fill up before the price hike. Usually, he has driven through many gas stations in the city and has never seen queues.

On March 18, gas stations in Hanoi operated normally, source: provided by interviewee

The gas stations are operating as usual, only the prices have skyrocketed, which is the most painful for locals. Wang Li shared a price trend chart showing that for more than half a year, gasoline and diesel prices mostly stayed around 20,000 dong. In February, prices even dropped to 18,000 dong (about 4.7 RMB). But the curve suddenly steepened in March. Last week, prices soared above 30,000 dong. Under various government measures to stabilize prices, they only recently fell back to around 27,000 dong per liter (about 7.1 RMB).

Vietnam oil price trend since June 2025, source: provided by interviewee

“Refueling a tank costs nearly 100 RMB more. Locals are not panicking, but they can’t help but complain about the rising fuel prices,” Wang Li said calmly.

And this is already the result of the Vietnamese government’s efforts to stabilize prices. Vietnam produces oil itself, but nearly half of its consumption still relies on imports, mainly from Middle Eastern countries, which puts obvious pressure.

On March 10, the Vietnamese government announced on its official website that the preferential import tariff rates for diesel, fuel oil, aviation fuel, and kerosene were reduced from 7% to 0%. The next day, Prime Minister Pham Minh Chinh announced the immediate use of the fuel price stabilization fund, providing subsidies of up to 5,000 dong per liter to curb retail price increases.

Vietnam is also actively diversifying import sources, even seeking help from Japan and South Korea. On Monday, the Ministry of Industry and Trade said that due to the global oil supply disruptions caused by the Iran situation, Vietnam has requested Japan and South Korea to help increase its oil supply channels. On the 18th, Pham Minh Chinh also had a phone call with the Prime Minister of Algeria, suggesting assistance to ensure Vietnam’s energy security.

However, early Thursday morning, Vietnam’s oil prices again surged above 30,000 dong, showing that the government still struggles to contain the international oil price surge. Moreover, media reports indicate that Vietnam’s strategic oil reserves can only sustain 20 to 50 days of energy demand, far below Japan’s 254 days and South Korea’s 208 days, and not even meeting the International Energy Agency’s (IEA) recommended 90-day oil reserve standard.

Liu Ying, researcher at Renmin University’s Chongyang Financial Research Institute, analyzed to the 21st Century Business Herald that Vietnam’s exposure in the Strait of Hormuz crisis reveals significant fragility, mainly due to the structural imbalance caused by supply disruptions. On one hand, Vietnam was once an oil exporter but has now become a net importer. Domestic oil production is declining, new oil fields are limited, refining capacity is limited, and it heavily depends on external refining technology, exporting crude oil overseas for processing and then importing refined products. On the other hand, Vietnam’s manufacturing industry has grown rapidly with large foreign investment, greatly promoting industrialization and increasing energy demand. However, supply-side growth has stagnated, widening the gap. Vietnam’s economy is highly integrated into the global supply chain and is very sensitive to energy costs.

“After conflicts in the Middle East, the Vietnamese government responded quickly with a combination of fiscal tools, diplomatic aid, and administrative measures to ease short-term pressure, but they cannot fundamentally resolve structural contradictions,” Liu Ying said.

“Who has the goods, who is the principal”

When oil prices fluctuate, the transportation industry is often the first to feel the pressure.

Cao Guoqiang is currently on a business trip in Cambodia, where oil also relies heavily on imports. Gas stations still have fuel and no queues, but prices have doubled. Laos and Cambodia are in similar situations, relying almost entirely on imports, and many mines have already limited or halted production. Vietnam’s situation is slightly better, but diesel prices have already increased by more than 30%, significantly raising transportation costs.

What hurts profit margins even more is the surge in raw material prices. Cao Guoqiang explained that all raw materials related to chemicals and petroleum are rising, and their tire industry, which is already highly competitive, faces raw material cost increases of 40% to 50%. They can only slightly raise their quotes to customers, which may not affect revenue much but will definitely squeeze profit margins. To fulfill orders and retain customers, they have no choice but to accept.

Sailun Group’s factories in Southeast Asia are still operating normally thanks to previous stockpiles. Some raw materials are bought at high prices, but a friend in Cambodia ordered 20,000 liters of diesel last week, and the contracts were ultimately canceled because the international oil price surged, making it difficult for import traders to bear the losses, leading to breach of contract and compensation.

Construction materials are also soaring to “market without price.” Wang Li, who often deals with construction material industry insiders, witnessed a 30% to 40% increase in cement, steel, and sand prices in just half a month. This boom is driven by both supply and demand. Since last summer, Vietnam launched a “construction frenzy,” initiating hundreds of large projects nationwide with a total investment of $50 billion, including bridges, roads, airports, and ports. The surge in demand for construction materials, combined with the Middle East conflict and the blockage of the Strait of Hormuz, caused production and transportation costs to skyrocket, and supply shortages pushed prices even higher.

“Previously, Vietnam’s cement and other building materials were abundant enough for export, but now everyone is scrambling for supplies. Suppliers with stock have gained the dominant position and become the de facto ‘principal,’” Wang Li said.

In the price surge caused by the “oil shortage,” some are anxious due to raw material shortages and rising costs, while others see opportunities for quick wealth.

“Now, the entire bulk commodity industry is raising prices. Opportunities in coal and mining sectors are actually emerging. Even if oil prices double again, they are still making money,” Cao Guoqiang sighed.

Electric vehicle companies have also recently received a wave of “wealth.” Vietnam’s largest electric vehicle company, VinFast, expects that rising fuel prices and global geopolitical tensions will support long-term demand for electric vehicles. The company plans to accelerate expansion and strengthen charging infrastructure.

Media reports indicate that in Hanoi, VinFast has had to hire more sales staff because since the Iran conflict erupted, showroom visits have surged, with 250 electric vehicles sold in three weeks.

Wang Li also observed that since March, local enthusiasm for buying electric motorcycles and new energy vehicles has increased significantly. Hanoi had already announced that starting July 1 this year, fuel-powered motorcycles would be banned from the “One Ring Road” in the city center. Many people are switching to electric vehicles, and with fuel prices rising, the demand for “abandoning oil for electricity” has naturally increased.

Building factories in Vietnam, enthusiasm cooling down

In recent years, many domestic media have associated Vietnam with keywords like “wealth creation myth” and “capital hot spot.”

However, Wang Li’s main business is serving Chinese companies going abroad to Vietnam. Being on the front lines, he has a clear sense of the recent change: “Recently, Chinese enterprises’ enthusiasm for Vietnam has become noticeably more restrained.” In his view, the cooling of investment fever is not due to oil or electricity shortages but mainly the long-standing issue—tariffs.

“After Trump returned to the White House, he launched so-called reciprocal tariffs and fentanyl tariffs against China. Some companies moved to Vietnam seeking lower export tariffs. But early this year, the U.S. Supreme Court declared the so-called ‘reciprocal tariffs’ invalid, narrowing the tariff gap between Vietnam and China. Companies that had considered Vietnam as an option are now hesitating, waiting for clearer tariff policies before making plans,” Wang Li told the reporter.

When Cao Guoqiang considers the impact of tariffs and oil prices, he also has a benchmark. In his opinion, the current high oil and raw material prices in Vietnam are an industry-wide shock, and some cost pressures can be passed downstream. But if his company faces higher tariffs than competitors, it would significantly weaken competitiveness. “If we pass the tariff costs onto customers, they will find other competitors in different countries.” Therefore, despite the fierce market fluctuations in Vietnam and Cambodia, Cao Guoqiang insists that the company’s investment and production layout in Southeast Asia will not change significantly because of this.

Besides Chinese enterprises, many Japanese, Korean, and European and American companies are also heavily investing in Vietnam, such as Samsung, Intel, LG in electronics, and Nike, Adidas in footwear. Moreover, Vietnam is no longer content with simple processing and assembly or labor-intensive industries; it also aspires to leap into high-end industries like semiconductors. Reports indicate that Vietnam now has over 50 chip design companies, many of which are involved in chip packaging and testing, and the first wafer manufacturing plant is about to start construction.

However, currently, Vietnam is also undergoing extreme oil shortage tests. Will its ambition to become a “global manufacturing center” turn into a dream?

Liu Ying believes that industries like electronics assembly and textiles are inherently low-profit sectors. If the Strait of Hormuz crisis worsens, rising oil prices will further propagate to transportation, fertilizers, construction materials, and other fields, squeezing factory profit margins. This could affect foreign investment confidence in Vietnam, leading to short-term hesitation in expansion and possibly raising investment thresholds in the medium to long term.

To some extent, the Vietnamese government’s recent efforts to stabilize oil prices are also aimed at stabilizing foreign investment. Liu Ying pointed out that over the years, foreign capital has entered Vietnam seeking higher efficiency and profits. Vietnam has set a GDP growth target of over 10% from 2026 to 2030. But if power shortages and poor transportation infrastructure are not properly addressed, Vietnam will find it difficult to convince foreign investors that it is a stable and reliable “workshop,” let alone attract high-end manufacturing with a “trustworthy industrial ecosystem.” Achieving high growth targets will be quite challenging.

For Chinese companies rushing into Vietnam, they should also realize that a country with a much smaller economy and scale than China may be more vulnerable in storms. Navigators must get used to sudden headwinds that go beyond tariffs, and they must skillfully steer through the waves.