Vietnam Cuts Import Duties to 0% on Key Oil Products

Vietnamese importers of gasoline, diesel, and petrochemical feedstocks will see temporary tariff relief following a government decree issued March 9th, 2026. The move, detailed in Decree No. 72/2026/ND-CP, eliminates import duties on a range of petroleum products and key raw materials used in their production, a measure intended to stabilize domestic fuel markets amid escalating geopolitical tensions in the Middle East.

The decision comes as rising instability in the region – specifically, conflict involving the United States, Israel, and Iran – disrupts global energy markets and threatens key shipping lanes like the Strait of Hormuz, a critical artery for crude oil transport. Asia, heavily reliant on Middle Eastern oil supplies, is particularly vulnerable to these disruptions. The Vietnamese government’s action aims to safeguard supply and moderate price increases for consumers and businesses.

Fuel Price Volatility and the Tariff Response

Prior to the decree, gasoline imports faced a 10% tariff. This has now been reduced to zero. Import duties on components used in gasoline blending, including naphtha and reformate (SH code 2710.12.80), have also been eliminated. Further reductions extend to diesel, fuel oil, aviation fuel, kerosene, xylenes, condensates, and p-xylenes, with tariffs dropping from 7% or 3%/2% to 0% depending on the specific product. This broad-based tariff relief is designed to lower input costs for Vietnamese refineries and fuel distributors.

The timing of the decree follows a significant increase in domestic fuel prices on March 7th, 2026. According to reports, the price of E5RON92 gasoline rose to a maximum of 25,226 Vietnamese Dong (VND) per liter, although RON95-III reached 27,047 VND per liter – increases of 3,777 VND and 4,707 VND respectively. Diesel prices also jumped to 30,239 VND per liter, and kerosene to 35,091 VND per liter. These price hikes reflect broader global trends, but the Vietnamese government is attempting to mitigate the impact on local consumers.

Impact on Vietnamese Businesses and Consumers

The immediate beneficiaries of this tariff reduction are Vietnamese fuel importers and refiners. Lower import costs should translate to greater stability in the domestic fuel supply and potentially limit further price increases. However, the extent of the price relief passed on to consumers will depend on market dynamics and the pricing strategies of individual companies. The decree is expected to particularly benefit businesses reliant on fuel for transportation and operations, such as logistics companies, manufacturers, and agricultural producers.

The Vietnamese government has indicated that the tariff reductions are temporary, scheduled to remain in effect until April 30th, 2026. After this date, import duties will revert to the rates outlined in Decree No. 26/2023, issued on May 31st, 2023, unless the Ministry of Industry and Trade deems it necessary to extend the relief period due to ongoing economic or market conditions. Lecourrier.vn reports that any extension would require justification related to economic development or market stabilization.

Broader Regional Context and Supply Chain Considerations

Vietnam’s move to reduce fuel import tariffs is part of a broader trend among Asian nations to bolster energy security in the face of Middle Eastern instability. The Strait of Hormuz, through which approximately 20% of the world’s oil supply passes, remains a focal point of concern. Disruptions to traffic through the strait could lead to significant price spikes and supply shortages across the region. Vietnam Plus highlights the direct impact of these potential disruptions on Asian economies.

Vietnam itself is increasingly reliant on imported crude oil and refined petroleum products to meet its growing energy demands. Domestic oil production is limited, and the country’s refining capacity is insufficient to meet its total consumption. This reliance makes Vietnam particularly vulnerable to fluctuations in global oil prices and disruptions to supply chains. The tariff reductions are therefore a proactive measure to mitigate these risks.

Potential Risks and Long-Term Implications

While the tariff reductions offer short-term relief, they also present potential challenges. Reducing import duties could negatively impact government revenue, although the extent of this impact will depend on the volume of imports and the duration of the relief period. The temporary nature of the measure creates uncertainty for businesses, potentially discouraging long-term investment in refining capacity or alternative energy sources.

The effectiveness of the tariff reductions will also depend on broader macroeconomic factors, including global oil prices, exchange rate fluctuations, and domestic demand. If global oil prices continue to rise, the tariff relief may be insufficient to fully offset the impact on consumers. The decree does not address underlying structural issues in Vietnam’s energy sector, such as limited storage capacity and inadequate infrastructure.

Next Steps and Market Monitoring

The Ministry of Industry and Trade will be closely monitoring the impact of the tariff reductions on domestic fuel prices and supply. The ministry will assess the need for further measures, including potential extensions of the tariff relief period or the implementation of other policies to stabilize the market. Industry stakeholders will be watching for any signals from the government regarding its long-term energy strategy. The French Customs Official Bulletins, while not directly related to Vietnam, provide a model for how governments manage tariff adjustments and communicate changes to importers and businesses.

Market participants should also monitor geopolitical developments in the Middle East and their potential impact on global oil prices. Any escalation of tensions in the region could lead to further disruptions to supply and renewed pressure on fuel prices in Vietnam and across Asia.