Vietnam Hikes Petroleum Prices amidst Escalating Global Tensions

The Vietnamese ministries of Finance and Trade yesterday August 9 raised the retail prices of petroleum products in the country by around 10 per cent due to the world price highs.

 

This is the second time this year the petroleum price hike has been made. The first increase took place in late April.

 

Under the new pricing mechanism, each liter of petrol of all kinds was added VND1,000 while a liter of diesel oil and kerosene was raised by VND700. A liter of widely-used A92 and A90 petrol now costs VND12,000 and VND11,800, respectively, while a liter of DO and kerosene stands at VND8,600.

 

According to an official from the Ministry of Finance, the rise resulted from a recent increase in world oil prices due to political tensions in the Middle East and the production suspension in a BP-run field in Alaska.

 

The price of light crude for September delivery traded on the New York Mercantile Exchange yesterday reached $76.53 a barrel, he said, adding that the world oil price movement seems hard to forecast.

 

To avoid the price domino effect, the Government asked all enterprises and State-funded bodies to cut down on their fuel uses. It also pledged to maintain the current prices of coal and electricity to control inflation and economic growth, Tran Van Ta, deputy minister of Finance said.

 

Under the Vietnamese rules, sales of petroleum products, except petrol, are subsidized by the State Budget. In return, the government sets retail prices of petroleum products, not oil traders.

 

With no major oil refineries, Vietnam totally relies on imported petroleum products to feed the national energy needs. Its first oil refineries are slated for operations in early 2009.

 

The country imported over 6.8 million tons of petroleum products worth roughly $3.7 billion in the first seven months of this year, down 2.9 per cent in volume but up 29 per cent in value on year.