The Strait of Hormuz Crisis: How Việt Nam is Handling the 2026 Global Oil Shock

On Feb. 28, 2026, the world watched in shock and horror as joint military strikes by the United States and Israel against the Islamic Republic of Iran triggered a conflict that closed the Strait of Hormuz. 

The de facto closure of this vital maritime trade route—which handles roughly one-fifth of the world’s sea-borne crude oil and liquefied natural gas (LNG)—has proven disastrous.

In response, markets reacted immediately and violently. Brent crude oil, sitting at around $72 a barrel before the conflict, skyrocketed past the $100 threshold, peaking near $126 in early March. 

Even a release of 400 million barrels from the International Energy Agency’s member stockpiles provided only a temporary buffer against the massive daily loss of global supply.

While Western nations wrestle with inflation and supply chain disruptions, Asia faces an unprecedented disaster due to its heavy reliance on Middle Eastern oil imports. 

To put this vulnerability into perspective, in 2024, 84% of the oil and 83% of the LNG traversing the Strait of Hormuz were bound for Asian markets.

Consequently, this geopolitical conflict has transformed into a nightmare of fuel queues, grounded flights, and economic panic. 

Southeast Asia is Bleeding at the Pump

For the Philippines, an archipelago completely reliant on imported crude, the crisis manifested quickly. Pre-conflict diesel prices hovered around 52 to 53 Philipine pesos (95 cents to 96 cents) per liter but have since surged to nearly 100 pesos per liter in some areas. 

This roughly 80% leap has utterly devastated logistics networks and the country’s public transport sector. Similarly, gasoline skyrocketed from around 55 pesos to an estimated 82 pesos per liter. 

Panicked by the threat of demand destruction and the sheer scale of the disruption, Philippine President Ferdinand Marcos Jr. declared a “state of national energy emergency.” 

This measure led to the swift implementation of a four-day workweek for government offices, the release of 2.5 billion pesos in cash subsidies to transport workers, and an issuance of desperate pleas for energy conservation.

In Thailand, efforts to shield the populace through aggressive subsidies are bleeding the state dry. The Thai government initially capped diesel at roughly 29.94 baht (86 cents) per liter. However, intense global pressure forced incremental increases to the ceiling, pushing it to 31.14 baht and eventually 33 baht . 

By mid-March, the Thai Oil Fuel Fund slipped into a deficit of over 12 billion baht , forcing the state to prepare a borrowing mechanism of up to 40 billion baht to keep the economy moving.

Meanwhile, heavily subsidized nations like Indonesia and Malaysia are incurring an astronomical fiscal cost in their efforts to protect their citizens. 

Indonesia managed to fix subsidized diesel (Biosolar) at 6,800 rupiah (45 cents) per liter, while non-subsidized Dexlite rose to 14,200 rupiah. 

Malaysia kept subsidized diesel locked at 2.15 ringgit (46 cents) per liter in certain states and capped subsidized RON95 gasoline at 1.99 ringgit. 

However, Malaysian Prime Minister Anwar Ibrahim also revealed that the national fuel subsidy bill ballooned from 700 million ringgit to a staggering 3.2 billion ringgit in a single week. 

Elsewhere, Cambodia experienced a massive 68% spike in petrol prices.

Aggressive Intervention and Stabilization

Unlike the reactive emergency declarations in Manila or the debt-fueled panic in Bangkok, Hà Nội is capitalizing on its dual advantage of a stabilization fund and strong domestic refining capabilities. 

Việt Nam is using pre-existing regulatory mechanisms to absorb the blow, specifically utilizing a structural financial buffer known as the Fuel Stabilization Fund (Bình ổn giá—BOG fund).

According to Việt Nam News, the Vietnamese government executed an aggressive market intervention on March 11. 

In a joint decision by the Ministry of Industry and Trade and the Ministry of Finance, authorities tapped the BOG fund at a massive rate of 4,000 đồng (15 cents) per liter for petrol and 5,000 đồng per liter for diesel. 

This move slashed the retail price of RON95-III petrol—the most widely used grade in the country—by 3,880 đồng, bringing RON95-III petrol down to 25,240 đồng per liter.

Without the fund, RON95 petrol would have surged by a projected 22.45%; instead, the government moderated the hike to a mere 7.66%. 

Furthermore, diesel prices rose by a negligible 1.58% in Việt Nam during that window, even as the cost of diesel nearly doubled in neighboring countries.

Acting as a barrier against the Middle Eastern supply collapse, the Dung Quất and Nghi Sơn refineries currently meet approximately 70% of domestic fuel demand. To secure the remaining gap, the Vietnamese government quickly mobilized four million barrels of crude oil from international partners, covering 30 to 45 days of domestic consumption.

Furthermore, to ensure that the BOG fund did not simply run dry under the immense weight of the daily subsidies, Prime Minister Phạm Minh Chính made the decisive move to advance funds from the 2025 state budget surplus to replenish the stabilization reserves. 

In addition to injecting state capital, the government swiftly cut the most-favored-nation import tariff on petrol to zero and proposed slashing the environmental protection tax on fuel by 50%.

However, these measures can only do so much against sustained global volatility and the sheer unpredictability of the market. 

According to The Straits Times, Việt Nam was forced into a sudden overnight hike just before midnight on March 19, pushing 95-octane petrol up by 20% and diesel by nearly 34%. 

This continued less than a week later on March 25, when diesel prices temporarily skyrocketed by a staggering 105% from pre-war levels, before the trade ministry hastily revised the cost downward just 14 hours later.

Realizing that financial maneuvering and budget advances cannot magically replace physical barrels of oil, Prime Minister Chính placed urgent calls to Qatar, Kuwait, Algeria, and Japan to plead for fuel support. 

In a longer-term bid for physical energy security, Hà Nội even signed a deal with Russia on March 23 to boost and expand cooperation in trade, investment, and energy. 

Ultimately, the plan is a masterful, yet increasingly strained, multi-layered economic defense strategy designed specifically to prevent the consumer panic and fuel hoarding that have paralyzed the streets of neighboring nations.

Creeping Inflation and the Cost of Living

While the Vietnamese government deserves credit for its swift deployment of the BOG fund and strategic tariff cuts—actions that successfully prevented immediate supply chain collapses and shielded the working class from an overnight cost-of-living catastrophe—the underlying economic reality is unforgiving.

The state cannot magically make the true cost of $126-a-barrel crude oil disappear.

Advancing funds from the state budget to prop up the stabilization fund merely shifts the financial burden from the petrol pump to future taxpayer obligations; it is an economic maneuver that protects consumers today by taxing them tomorrow. 

Furthermore, artificially suppressing domestic fuel prices far below regional averages has inadvertently created an environment that encourages cross-border fuel smuggling. 

With Cambodian prices spiking by nearly 68% while state cash holds costs down in Việt Nam, illicit markets will inevitably exploit the situation if this price disparity worsens or persists for an extended period of time.

Despite efforts to hold the line at the pump, the overarching effects of the global energy shock are actively degrading daily life and creeping into every facet of the domestic economy. 

The Ministry of Industry and Trade has urged businesses and citizens to work from home to conserve national fuel supplies, transforming daily mobility from a routine expectation into an expensive luxury.

Although isolated relief exists, such as the electric-vehicle taxi operator Green & Smart Mobility cutting fares by 10% to ease the public burden, the broader transport sector is buckling. 

Making domestic travel and shipping significantly more expensive, the Railway Transport Joint Stock Company announced a 10% hike in passenger tickets and a 15% increase in freight rates. 

Battered by staggering jet fuel costs, the aviation sector is also suffering; Việt Nam Airlines temporarily suspended flights on certain domestic routes, and VietJet Aviation entirely reduced flight frequencies, disrupting travel and business operations nationwide.

Beyond transportation, average Vietnamese families are feeling the insidious creep of secondary inflation. Facing extreme volatility, logistics companies have initiated contingency pricing, adding steep, diesel-tied surcharges of up to 100,000 đồng per container, while some transport providers have shortened the validity of price quotations to a mere 24 hours. 

These elevated freight costs are already trickling down into the prices of food, agricultural products, and everyday consumer goods. Economic analysts project that if Middle Eastern geopolitical tensions persist, these cascading input costs will inevitably spread, potentially pushing the Consumer Price Index (CPI) of the nation up by an additional 1 to 2 percentage points.

A Baptism by Fire

For Vietnamese citizens, their everyday reality is increasingly defined by pervasive and inescapable uncertainty. Although they are not facing the immediate, devastating price shocks seen in Manila or the massive debt anxieties in Bangkok, they are nonetheless trapped in their own economic quagmire. 

With the cost of living rising and travel becoming more restricted, anxiety over a prolonged global conflict looms heavily over daily decisions. Families must now stretch their budgets for more expensive food, accept limited and costly travel options, and navigate a job market that increasingly urges them to stay home to conserve national energy.

This situation comes at a remarkably sensitive political juncture, arriving immediately on the heels of the recently concluded 2026 nationwide general elections; the fuel crisis coincides with the Communist Party of Việt Nam securing near-total control of the National Assembly. 

Because independent candidates were entirely sidelined and General Secretary Tô Lâm successfully won his seat in Hà Nội, the political elite have—once again—firmly entrenched their power.

Thus, the new government possesses absolute, unchecked authority over the trajectory of the nation. However, absolute authority demands absolute competence in the face of a crisis. Without an opposition to blame for legislative gridlock or policy failures, the ruling party owns this economic fallout in its entirety. 

This global oil shock serves as the ultimate baptism by fire for the newly cemented government. Their capability will be definitively tested by how they manage the dwindling reserves of the stabilization fund, navigate creeping inflation, and maintain the delicate financial balance of the economy. 

The Iranian fuel crisis is their proving ground, and for the average citizen holding their breath at the petrol pump, the current response from the leadership of Việt Nam will undoubtedly serve as the prelude to the rest of their tenure.