Petrochemical Industry Faces Strong Impact as Middle East Conflict Escalates

* Concerns over supply shortages

Rising geopolitical tensions in the Middle East are creating a major shock for the global energy market. Recent developments in the conflict, particularly the risk of disruption to oil transportation through the Strait of Hormuz, have pushed global oil prices sharply higher and raised concerns about a potential energy supply crisis.

According to the latest report from the International Energy Agency (IEA), the current conflict could cause “the largest supply disruption in the history of the oil market.” The agency estimates that global oil supply in March could decline by about 8 million barrels per day, equivalent to nearly 8% of global demand, mainly due to stalled oil flows through the Strait of Hormuz.

In the market, Brent crude oil – the global benchmark – at one point surged to USD 119.5 per barrel before easing to around USD 97 per barrel, reflecting investors’ concerns about potential supply shortages.

One of the key factors worrying the global energy market is the situation in the Strait of Hormuz, a strategic maritime route between Iran and Oman. This strait handles around 20% of the world’s oil and LNG supply.

Market reports indicate that oil transportation through this area has been severely disrupted as military tensions escalate. Many oil tankers have been forced to suspend operations, while transportation costs have surged. The charter rate for very large crude carriers (VLCCs) from the Middle East to Asia has exceeded USD 400,000 per day, a record high in the energy shipping sector.

According to analysts at Goldman Sachs, if oil flows through the Strait of Hormuz are not restored soon, global oil prices could exceed USD 100 per barrel in the short term.

** Impact on fuel prices in Vietnam

Vietnam remains a net energy importer, as domestic crude oil production only meets about 30–35% of demand, while the remainder must be imported. Therefore, the Middle East conflict is expected to impact the domestic fuel market.

In the context of volatile oil prices caused by the conflict, the Petroleum Price Stabilization Fund is used as a tool to reduce price shocks.

Under the current Middle East conflict situation, the fund helps to: Limit sudden spikes in gasoline prices; Reduce inflationary pressure on the economy; Support stability in transportation, logistics, and production costs.

 

Image: Recent fuel price movements in Vietnam

 

During the price adjustment periods around 10–14 March 2026, the Ministry of Industry and Trade and the Ministry of Finance decided to use the fund with relatively high support levels:

• E5 RON92 gasoline: about VND 4,000 per liter
• RON95 gasoline: about VND 4,000 per liter
• Diesel: about VND 5,000 per liter
• Kerosene: about VND 4,000 per liter
• Mazut: about VND 4,000 per kg

 

These amounts were directly offset from the stabilization fund to reduce the cost components of retail fuel prices.

Thanks to this support, domestic fuel prices have remained stable or increased only slightly despite the sharp rise in global oil prices. Prices were kept unchanged compared to the previous adjustment thanks to continued use of the stabilization fund.

In the short term, regulatory tools may help mitigate price shocks. However, if global oil price volatility persists or escalates, the domestic fuel market will continue to face significant pressure in future adjustment periods. The development and wider adoption of biofuels is also considered by experts as one of the long-term solutions to reduce Vietnam’s dependence on fossil gasoline.

Source: Industry and Trade Newspaper