Vietnam's Crude Crisis: Navigating Declining Production and Growing Import Reliance

Vietnam is facing a decade of dwindling domestic crude oil production, according to a government document, raising reliance on imports as its offshore fields age and geopolitical tensions affect global supplies. The outlook aligns as Vietnam, a major industrial hub with significant electronics and garment manufacturing, prepares for oil shortages spurred by the U.S.-Israeli conflict with Iran and resulting export restrictions.

Crude output is expected to decline to 5.8 million-8.0 million metric tons annually between 2026 and 2030, from an average of 8.6 million tons over the past five years, reports the industry ministry. This reduces self-sufficiency will heighten dependency on imports, which rose last year by 5.3% to 14.2 million tons, as per Vietnam's customs data.

Kuwait supplied about 80% of Vietnam's crude imports last year, but shipments are now stalled by Iran's Strait of Hormuz closure. Vietnam also imports refined fuels, with its refineries providing around 70% of national demand. Rising gasoline prices by 30% and diesel by 40% since the Iran war's onset, coupled with shortage threats, have prompted work-from-home advisories and warnings of airline service cuts. Vietnam has engaged Middle Eastern, Japanese, South Korean, and Angolan officials to secure alternative supplies.

The government is striving to hike domestic production by boosting exploration efforts and offering international oil companies incentives for investment in offshore fields, aiming to increase recoverable reserves by 13 million-17 million tons annually during 2026-2030.