Vietnam scraps fuel duties as Mideast war hits supplies

HANOI, Vietnam - Vietnam announced on Monday it was scrapping tariffs on fuel imports, as the US-Israeli war with Iran disrupts oil supplies and pushes prices to their highest level since 2022.

With motorists queuing for petrol at stations in the capital Hanoi, the government announced on its website a decree "amending the preferential import tariff rates on several petroleum products and inputs used for gasoline production".

Vietnam currently imposes tariffs of 10 percent on unleaded gasoline and seven percent on diesel, aviation fuel and kerosene -- all of which have been slashed to zero effective immediately.

The move is intended to "help stabilise the domestic market and ensure national energy security", the ministry of finance said in an earlier statement.

"If the conflict continues and the blockade of the Strait of Hormuz persists, alternative supplies on the international market will become scarce and risk driving prices up," it said, referring to the waterway through which a fifth of global crude usually passes.

Since the war began more than a week ago with US and Israeli strikes on Iran, prices of fuel in Vietnam have risen sharply and the government has implemented emergency pricing protocols.

The cost of the most widely used grade of gasoline has risen 21 percent to 27,040 Vietnamese dong ($1.03) per litre -- the highest since July 2022, state media reported.

Diesel prices have surged more than 50 percent.

Vietnam has so far avoided mass shortages, but state media reported that dozens of smaller petrol stations have either temporarily closed or shortened their operating hours due to dwindling supplies.

On Monday night, cars and motorcycle riders were lined up at Hanoi petrol stations, waiting to refuel in anticipation of future price hikes.

"I am afraid the price will increase tomorrow, so I have to fill tonight," said Tran Danh Huy, 25, who estimated he was one of a hundred riders queuing at one station.

Many motorists were feeling pinched at the pump, despairing of what a prolonged Middle East conflict could mean.

"The price is sky-high. My salary is still the same but the price of the gas is significantly going up," said Le Quang, 25, a teacher living in Ho Chi Minh City.

"I think I will need to walk to work."

Monday's tariff decree is effective until the end of April.

The crisis in the Middle East has seen crude prices spiral above $100 a barrel, the highest since Russia's invasion of Ukraine in early 2022. — Agence France-Presse