Pacific Money | Economy | Southeast Asia

Vietnam Asks Japan, South Korea For Help Accessing Crude Oil Supplies

With one of the smallest “petroleum buffers” in the region, the Iran war could hit the Vietnamese economy with particular force.

A petrol station in Nha Trang, Vietnam.

Vietnam has asked Japan and South Korea to help improve its access to crude ​oil amid the disruptions in supply brought about by the ‌Iran war, the country’s Ministry of Industry and Trade said yesterday.

Deputy Minister of Industry and Trade Nguyen Hoang Long made the ​requests on the sidelines of an energy security ​summit in Tokyo over the weekend, Reuters reported.

In a meeting with Matsuo Takehiko, the vice minister for international affairs at Japan’s Ministry of Economy, Trade and Industry, Long “requested that Japan, given its important role and large crude oil reserves, assist Vietnam in sourcing and accessing crude oil to meet domestic needs,” the Ministry said in a statement.

Long also met with Kim Jung-Kwan, South Korea’s minister of trade, industry, and energy, during which he “requested South Korea’s support in helping Vietnam access crude oil sources to facilitate imports amidst the complex conflict situation in the Middle East,” the statement added.

The combined U.S. and Israeli attack on Iran has prompted Tehran to choke off oil exports through the Strait of Hormuz, resulting in a spike in the price of oil and gas from the Middle East, the source of around 60 percent of Asia’s crude oil imports.

Long’s requests to Tokyo and Seoul point to the severe impacts that the Iran war, which is now approaching the end of its third week with no end in sight, could have on Vietnam.

According to Reuters, Vietnam has two oil ​refineries that meet about 70 percent of its fuel needs, although much of the crude oil that they process is imported from the Middle East. In total, around 87 percent of Vietnam’s oil imports come from the region.

Compounding the issue is the fact that Vietnam’s petroleum buffer “remains one of the thinnest in the region,” according to a report by the Asia Media Center. The country has a dedicated national reserve that is equivalent to just nine days of net imports, with most reserves held by key petroleum trading enterprises, which are required to maintain 20 days’ worth of reserves. “This means inventories are largely geared toward immediate market distribution rather than long-term emergency storage,” the report stated.

By contrast, Japan holds reserves equivalent to 254 days of consumption, followed by South Korea with 208 days. Thailand and the Philippines hold reserves equivalent to 60 days of use, Malaysia has a reserve of 30 days, and Indonesia’s reserves are equivalent to 20-25 days. Singapore has substantial reserves, although their exact size has not been disclosed.

If sustained, higher oil and gas prices threaten to foil the government’s ambitious economic growth plans. At its 14th National Congress in January, the Communist Party of Vietnam endorsed a target of 10 percent GDP growth per annum for the 2026-2030 period, up from an average of around 5.7 percent during 2021-2024.

Shortly after the outbreak of the conflict, the Vietnamese government instructed citizens to stay at home more to save fuel. It said that commuters should ride bicycles, carpool, use public transport, and “restrict personal vehicle use when unnecessary.” The government has also warned the country’s ​aviation industry to “prepare for potential flight reductions from April” after ‌China and Thailand halted exports of jet fuel due to the Iran war, increasing the likelihood of shortages. Vietnam imports around two-thirds of its jet fuel, most of which comes from China and Thailand, according to Reuters.

Similar measures have been introduced across Southeast Asia, as governments prepare for an economic shock that could dwarf the regional impact of the Russia-Ukraine war. On Friday, ASEAN’s economic ministers met in the Philippines for a scheduled meeting that was dominated by discussions on the impact of the conflict. The ministers expressed concern that a protracted war could “pose sustained challenges to the global economic outlook” and “impact economic security and stability, the livelihoods of millions of people in the region,” according to a joint statement issued at the close of the meeting.

So far, the bloc’s 11 member states have taken a number of steps to counter the economic impact of the conflict by ​conserving energy, absorbing supply shocks, or attempting to push down demand for petrol and other fuels.

Get to the bottom of the story

Subscribe today and join thousands of diplomats, analysts, policy professionals and business readers who rely on The Diplomat for expert Asia-Pacific coverage.

Get unlimited access to in-depth analysis you won't find anywhere else, from South China Sea tensions to ASEAN diplomacy to India-Pakistan relations. More than 5,000 articles a year.

Unlimited articles and expert analysis

Weekly newsletter with exclusive insights

16-year archive of diplomatic coverage

Ad-free reading on all devices

Support independent journalism

Already have an account? Log in.

Vietnam has asked Japan and South Korea to help improve its access to crude ​oil amid the disruptions in supply brought about by the ‌Iran war, the country’s Ministry of Industry and Trade said yesterday.

Deputy Minister of Industry and Trade Nguyen Hoang Long made the ​requests on the sidelines of an energy security ​summit in Tokyo over the weekend, Reuters reported.

In a meeting with Matsuo Takehiko, the vice minister for international affairs at Japan’s Ministry of Economy, Trade and Industry, Long “requested that Japan, given its important role and large crude oil reserves, assist Vietnam in sourcing and accessing crude oil to meet domestic needs,” the Ministry said in a statement.

Long also met with Kim Jung-Kwan, South Korea’s minister of trade, industry, and energy, during which he “requested South Korea’s support in helping Vietnam access crude oil sources to facilitate imports amidst the complex conflict situation in the Middle East,” the statement added.

The combined U.S. and Israeli attack on Iran has prompted Tehran to choke off oil exports through the Strait of Hormuz, resulting in a spike in the price of oil and gas from the Middle East, the source of around 60 percent of Asia’s crude oil imports.

Long’s requests to Tokyo and Seoul point to the severe impacts that the Iran war, which is now approaching the end of its third week with no end in sight, could have on Vietnam.

According to Reuters, Vietnam has two oil ​refineries that meet about 70 percent of its fuel needs, although much of the crude oil that they process is imported from the Middle East. In total, around 87 percent of Vietnam’s oil imports come from the region.

Compounding the issue is the fact that Vietnam’s petroleum buffer “remains one of the thinnest in the region,” according to a report by the Asia Media Center. The country has a dedicated national reserve that is equivalent to just nine days of net imports, with most reserves held by key petroleum trading enterprises, which are required to maintain 20 days’ worth of reserves. “This means inventories are largely geared toward immediate market distribution rather than long-term emergency storage,” the report stated.

By contrast, Japan holds reserves equivalent to 254 days of consumption, followed by South Korea with 208 days. Thailand and the Philippines hold reserves equivalent to 60 days of use, Malaysia has a reserve of 30 days, and Indonesia’s reserves are equivalent to 20-25 days. Singapore has substantial reserves, although their exact size has not been disclosed.

If sustained, higher oil and gas prices threaten to foil the government’s ambitious economic growth plans. At its 14th National Congress in January, the Communist Party of Vietnam endorsed a target of 10 percent GDP growth per annum for the 2026-2030 period, up from an average of around 5.7 percent during 2021-2024.

Shortly after the outbreak of the conflict, the Vietnamese government instructed citizens to stay at home more to save fuel. It said that commuters should ride bicycles, carpool, use public transport, and “restrict personal vehicle use when unnecessary.” The government has also warned the country’s ​aviation industry to “prepare for potential flight reductions from April” after ‌China and Thailand halted exports of jet fuel due to the Iran war, increasing the likelihood of shortages. Vietnam imports around two-thirds of its jet fuel, most of which comes from China and Thailand, according to Reuters.

Similar measures have been introduced across Southeast Asia, as governments prepare for an economic shock that could dwarf the regional impact of the Russia-Ukraine war. On Friday, ASEAN’s economic ministers met in the Philippines for a scheduled meeting that was dominated by discussions on the impact of the conflict. The ministers expressed concern that a protracted war could “pose sustained challenges to the global economic outlook” and “impact economic security and stability, the livelihoods of millions of people in the region,” according to a joint statement issued at the close of the meeting.

So far, the bloc’s 11 member states have taken a number of steps to counter the economic impact of the conflict by ​conserving energy, absorbing supply shocks, or attempting to push down demand for petrol and other fuels.

Sebastian Strangio is Southeast Asia editor at The Diplomat. 

U.S.-Israel war on Iran

Vietnam energy sector

© The Diplomat