Petrol prices not likely to decrease due to expensive dollar

With world crude oil prices decreasing hopes were sparked of a domestic price decrease. However, petroleum importers and distributors say they don’t plan to cut prices at present.

By December 8, the crude oil price on the world’s market had dropped to 74 dollar per barrel – much lower than the 78.55 dollar per barrel seen on November 19, the day, when the domestic petrol price was raised.

Nevertheless, all petroleum distributors VietNamNet contacted, said they still cannot slash petrol retail prices, because they are still incurring losses with the sale of some products.

Vuong Thai Dung, deputy general director of Petrolimex, which is now holding 60 percent of the petroleum distribution market, said that in principle, domestic petrol prices are adjusted in accordance with world prices.

However petroleum distributors are being put under pressure by the dollar price increase. The State Bank of Vietnam in late November announced the adjustment of the dong/dollar rate which saw the dong losing several percent against the dollar.

According to Dung, the average price of finished petrol products has stayed at $81 per barrel over the last 20 days, while diesel has remained firmly at $80 per barrel.

The price quoted in Singapore market for A92 petrol was $80.11 dollars per barrel on December 7, while diesel prices was $83.6 per barrel. The price levels represent a slight increase over a month ago.

Also according to Dung, as dollar prices increase by 500-600 dong per dollar, the petrol cost price has increased significantly meaning petrol distributors can break even but not make a profit. Meanwhile, they are incurring a loss of 500 dong for every liter of oil sold. With the dollar increasing by 600 dong, every liter of diesel has increased by 300 dong

A representative from Dong Thap Petroleum Company also confirms that prices of finished products have not decreased, therefore, it cannot think about slashing prices at present.

An official from the Price Control Agency under the Ministry of Finance has also confirmed his agency has not received proposals to cut prices from petrol distributors.

Vietnamnet Bridge

Tags: Vietnam Petrol prices