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How does the negative oil price due to COVID-19 affect the Vietnamese economy?

How does the negative oil price due to COVID-19 affect the Vietnamese economy?

Wednesday 22, 04 2020
On the bright side, General Director of the General Statistics Office Nguyen Bich Lam says that Vietnam can import oil for a cheaper price, thus stimulating production.

The oil prices go negative

In the early morning of 21st April (GMT+7), the price of the WTI crude oil (America) delivered in May dropped to a record level. Initially, the WTI level fell to -40.32 USD/barrel and went back to -37.63 USD/barrel at the end of the session.

This is the first time the global crude oil prices have ever plummeted to the negative level of below 0 USD/barrel.

The consequences are not that dire

Commenting on the impacts of the negative oil prices on the Vietnamese economy, General Director of the General Statistics Office Nguyen Bich Lam says that the export oil value of Vietnam may be affected.

However, he stresses that in recent years, Vietnam has grown less dependent on crude oil. “Our oil mining is gradually reducing year after year, due to the shortage of reserve.

How does the negative oil price due to COVID-19 affect the Vietnamese economy?

The crude oil mining accounts for only 70% of the mining industry, which in turn accounts for only 12% in the manufacturing and processing industry”, he says. Therefore, the oil price does not affect many industries. Meanwhile, Vietnam will be able to import oil at cheaper prices, which, according to Lam, will reduce the domestic product prices, stimulating production. This is an advantageous factor for the economy – he says.

In Vietnam, the impacts of the global oil prices have continuously and unprecedently reduced the oil prices, for example, the RON95 petrol price is currently at approximately 12,000 VND/liter. Specifically, the maximum E5RON92 petrol price on the market is 11,343 VND/liter, and the RON95-III petrol price on the market has not been higher than 11,939 VND/liter since 13th April.

In the press, Vice President of the Vietnam Petroleum Association Trinh Quang Khanh says that the domestic gasoline price in the immediate future has not been affected by the unprecedented plunge of world oil prices.

Regarding the indirect impacts, the enterprises of the Vietnam Petroleum Association will keep following and evaluating the American WTI oil price impacts on the Asian oil and petroleum market.

Particularly, the effects of the WTI oil price on the oil prices in several markets from which Vietnam imports this kind of product to come up with an appropriate buying plan. At the moment, the main oil and petroleum exporters for Vietnam are Singapore, South Korea, and Malaysia.

​>> The plummet in oil price: How and why?

Source: https://cafef.vn

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