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What does the MoIT think about the world market’s volatile oil prices in the past month?
State management agencies and firms closely looked at the global petrol situation in the past month. The price of oil in the world may be in a tight range in 2012 compared to the 2011 average of around $100/barrel if the world economy, particularly the European Union, continues to be in a fix.
However, new factors have appeared which may fuel petrol prices in 2012 against 2011. These are political unrest in the Middle East and North Africa and the EU adopted an oil embargo against Iran, the world’s third largest oil exporter.
In fact, the price of oil in the world market surged in early days of December 2011 when Iran held manoeuvres and was poised to close Hormuz Channel- a strategic gateway for oil sources from the Middle East heading to locations worldwide when necessary.
Compared to December 2011, January 2012 average price of petrol A92 hiked 8.3 per cent, of diesel 0.05S up 3.9 per cent, of kerosene KO up 3.1 per cent, of mazut FO up 7.8 per cent and of crude oil 1.8 per cent more.
Against the same period in 2011, January 2012 average prices rose markedly, such as that of petrol A92 up 15.7 per cent, of diesel 0.05S up18.7 per cent, of kerosene KO up 15.3 per cent, of mazut FO leaped 34.7 per cent and of crude oil WTI was added 11.9 per cent.
The Middle East political unrest will adversely influence the region’s oil sources, directly impacting world oil prices.
How will this impact on local firms’ performances?
Oil prices augmenting in the world market will push up prices in the domestic market. Since petrol is an input material of most economic sectors, rising oil prices could drive up product prices, from there pushing up consumer price index badly affecting people’s purchasing power and causing inflation threats.
Cash-strapped Vietnamese firms would be hurt on the back of input price upsurges since most of them employ fuel-intensive obsolete equipment and technology.
Petrol price hikes will make items using petrol as direct fuel source more expensive such as footwear, plastic, fabric, textile and garment products. Chain effects will also be significant, for instance, firms will suffer from rising transportation costs.
World oil prices are forecast to climb to $150 per barrel. How will the MoIT ensure stable oil supply for the economy in that case?
Vietnam is a big petrol importer. In 2009, we imported 13.2 million cubic metres per tonne of petrol products. The volume shrank to 8.8 million cubic metres per tonne in 2010 and 10.3 million cubic metres per tonne in 2011 since part of the demand was offset by production by Dung Quat oil refinery in central Quang Ngai province.
Around 15.6 million cubic metres per tonne petrol products were consumed in the domestic market in 2011. This year, domestic consumption of petrol products would be around 16.5 million cubic metres per tonne based on 6-6.5 per cent GDP growth forecast.
After looking at domestic supply capacity, the MoIT has allocated minimum import quotas in 2012 equaling 10.1 million cubic metres per tonne on major petrol traders. The ministry has demanded those traders not to import lower than this volume target, while ensuring import progress.
Petrol trading is also governed using other vehicles such as import tax policies and the price stabilisation fund. The MoIT and the Ministry of Finance work closely in petrol price management to ensure interest balance among consumers, firms and the state.