Source: VIRAC, World Bank
World crude oil prices in 2019 fluctuated due to unstable political – economic situation in the world, typically the escalating US-China trade war. By 2020, governments will continue to shut down to prevent the Covid-19 pandemic.
Closing the session on 18/3, US crude oil prices hit the lowest level, down to 56% in the last 18 years. Brent crude oil fell 13.4% from 3.85 USD to 24.88 USD/barrel, sometimes touching 24.52 USD/barrel, the lowest since 2003. West Texas WTI crude oil decreased 24.4% from 6.58 USD to 20.37 USD/barrel.
In 2019, domestic production of gasoline in Vietnam increased the most in recent years, reaching 22% thanks to the stable operation of two factories Dung Quat and Nghi Son. Contrary to the above situation, in the first 2 months of 2020, petroleum exports reached 441,317 tons, earning US $ 269.91 million, down 21.6% in volume and 21.3% in turnover compared to 2 first months of 2019.
Source: VIRAC, GSO
According to calculations, with each reduction of 1 USD of oil price, oil export revenue of Vietnam Oil and Gas Group (PVN) will decrease by approximately 225,000 USD/day. Therefore, with the current oil price of 20-25 USD/barrel, PVN will lose about 3 billion USD in revenue in 2020, seriously affecting the business results of the Group and revenue of national budget.
In Vietnam market, the demand for petrochemical products in the country also dropped sharply, many major petroleum enterprises also faced difficulties in product consumption.
From the beginning of the year until now, the price of gasoline has gone through 6 adjustment periods and all 6 times have decreased. The price cut on March 29 is very deep so gasoline price is only nearly 12,000 dong/liter.
VIRAC forecasts that Brent oil prices will continue to plummet in the near future (sometimes more than 16% sometimes), due to fears that oil demand will weaken in China, which has been severely affected by Covid-19. Falling oil prices had a relatively negative impact on the domestic mining industry; in addition, China is also a major partner of Vietnam with oil, gas and petrochemical products; reducing import and export transactions will have a strong impact directly on related companies.