Vietnam may scrap fuel import tariffs to stabilise prices as Middle East conflict disrupts oil supplies, pushing domestic costs to a four-year high.

HANOI: Vietnam is considering a plan to eliminate import duties on fuel. The government says this is necessary to stabilise the domestic market and ensure national energy security amid supply disruptions caused by the US-Israeli war with Iran.

The Ministry of Finance drafted a decree to slash import tax rates to zero on some petroleum products. It warned that a prolonged conflict and blockade of the Strait of Hormuz would make alternative supplies scarce and drive prices higher.

Since the war began over a week ago, fuel prices in Vietnam have risen sharply. The government has already implemented emergency pricing protocols in response.

The cost of the most widely used grade of gasoline has risen 21% to 27,040 Vietnamese dong (USD 1.03) per litre. This is the highest price recorded since July 2022, according to state media.

Diesel prices have surged more than 50% in the same period. Vietnam currently imposes tariffs of 10% on unleaded gasoline and 7% on diesel, aviation fuel and kerosene.

All these duties would be temporarily removed under the new decree. The finance ministry’s proposal must still be approved by the government.

If approved, the tariff decree would be effective until the end of April. The crisis has seen crude oil prices soar to nearly USD 120 a barrel, the highest since Russia’s invasion of Ukraine in early 2022.

Vietnam has so far avoided mass shortages and long fuel lines. However, state media reported dozens of smaller petrol stations have either temporarily closed or shortened operating hours due to dwindling supplies.

Commuters are feeling the pinch at the pump, with some despairing over a prolonged conflict. “The price is sky-high,” said Le Quang, a 25-year-old teacher in Ho Chi Minh City.

“My salary is still the same but the price of the gas is significantly going up. I think I will need to walk to work.”

 The Sun Malaysia