Vietnam Jet Fuel Crisis: Rationing Could Begin by Early April After China Halts All Kerosene Exports

Vietnam's aviation sector is facing its most severe fuel supply crisis in decades as the country braces for potential jet fuel shortages beginning in April 2026. The disruption stems from export bans imposed by China and Thailand, Vietnam's two largest suppliers of Jet A-1 aviation kerosene, triggered by the wider energy shock following the Iran conflict that erupted on 28 February 2026.

Vietnam depends on imports for more than two-thirds of its total aviation fuel needs. Roughly 60% of those imports have historically come from China and Thailand. China first instructed its refiners to stop signing new kerosene export contracts before escalating to a full ban on refined fuel exports effective 11 March 2026. Thailand followed on 06 March by suspending exports of refined oil products, including jet fuel, to all countries except Myanmar and Laos. Supplies from Singapore have also declined sharply, leaving Vietnam with very limited options to cover its fuel demand.

The Civil Aviation Authority of Vietnam (CAAV) issued a formal warning to the Ministry of Transport on 09 March 2026, stating that risks of jet fuel shortages for Vietnamese airlines could materialize from early April onward. The regulator ordered airlines to review their operational plans, with particular attention to domestic routes, and instructed airport operators to prepare additional aircraft parking space in case carriers need to ground part of their fleets.

Vietnam's two major jet fuel importers, Petrolimex Aviation and Skypec (Vietnam Air Petrol Company), have confirmed to regulators that existing supply contracts can only guarantee fuel delivery through the end of March 2026. Partners in Singapore, Thailand, and China are delaying shipments and some may invoke force majeure clauses to exit their contracts altogether. Skypec has gone further, urging the government to restrict air transport to essential domestic flights only if the shortage deepens.

The price impact has been immediate and dramatic. Jet A-1 fuel prices on the Singapore market, the regional benchmark, surged from approximately USD 83-89 per barrel in January and February 2026 to USD 231.42 per barrel in early March. By 13 March, Brent crude had climbed to around USD 100-101 per barrel, while Jet A-1 based on Singapore MOPS was trading near USD 209.52 per barrel. The average price for March 2026 stood at USD 167.29 per barrel. Fuel typically accounts for 35-40% of airline operating costs, and at these elevated levels, Vietnam Airlines reported that monthly operating expenses could increase by 50-60%, while VietJet Air estimated an additional VND 2 trillion (approximately USD 80 million) per month in fuel costs alone.

Flight cancellations have already begun, though initially driven by Middle Eastern airspace closures rather than fuel supply constraints. Between 28 February and 10 March 2026, a total of 98 flights connecting Vietnam to the Middle East were cancelled by Qatar Airways, Emirates, and Etihad Airways, affecting approximately 20,000 passengers. During 12-13 March alone, Qatar Airways cancelled 13 additional flights (9 passenger, 4 cargo) affecting nearly 2,000 passengers, while Emirates continued to cancel its EK364/EK365 services on the Dubai-Ho Chi Minh City route, impacting another 1,300 travelers. Vietnamese carriers have not yet cancelled domestic flights due to fuel scarcity, but the CAAV has warned that schedule adjustments from April 2026 are increasingly likely.

Vietnam Airlines has already requested additional fuel loads on its existing flights as a precaution and is preparing contingency diversion routes via China, Russia, or North Africa. VietJet Air does not operate over Israeli or Iranian airspace but faces the same domestic fuel supply pressures. Bamboo Airways, Vietravel Airlines, and Sun Phu Quoc Airways do not currently serve European routes.

Estimating when rationing could begin requires some calculation. Vietnam allocated 1.2 million cubic meters of aviation fuel for the full year 2025, equivalent to roughly 100,000 cubic meters per month or about 20,000 barrels per day. Pre-crisis jet fuel consumption was estimated at approximately 46,000 barrels per day at peak (2019 levels), with post-pandemic recovery bringing consumption back toward 35,000-40,000 barrels per day by early 2026. Vietnam's domestic refineries at Dung Quat and Nghi Son produce some Jet A-1 but are currently prioritizing other petroleum products, covering at most 30% of aviation fuel needs. With imports from China and Thailand cut to zero and Singapore volumes declining, the remaining import capacity could fall to 10-15% of normal levels. At that rate, available supply would cover only 40-45% of demand. Strategic fuel reserves for aviation are minimal, with the government maintaining roughly one month of peak demand coverage across all petroleum products. Given that guaranteed import contracts expire at the end of March, physical rationing or mandatory flight reductions could realistically begin during the first or second week of April 2026 unless alternative supply contracts are secured.

The Vietnamese government has responded on multiple fronts. The import tax on aviation fuel from non-ASEAN sources was reduced to 0% effective 09 March 2026. The CAAV has proposed a full exemption of the environmental protection tax on aviation fuel through the end of May 2026, a reduction in value-added tax on jet fuel, and a mechanism allowing airlines to apply flexible fuel surcharges on domestic tickets. The government also activated its fuel price stabilization fund, disbursing up to VND 5,000 per liter to cushion retail fuel price increases from 11 March onward.

Diplomatically, the situation is being treated as a matter of national energy security. Foreign Minister Le Hoai Trung met with Chinese Foreign Minister Wang Yi in Hanoi on 15 March to discuss coordination on energy supply. Prime Minister Pham Minh Chinh separately raised the issue with the Thai ambassador. The CAAV has identified South Korea, Japan, Brunei, and India as potential alternative suppliers, but acknowledges that negotiating and executing new supply contracts under current market conditions will take considerable time.

The crisis underscores a structural vulnerability in Vietnam's energy supply chain. With over 70% of aviation fuel imported and sources concentrated in just two countries, the sector was exposed to exactly the kind of cascading disruption now unfolding. Even if geopolitical tensions ease and export bans are lifted, the recovery timeline for fuel logistics, contract renegotiation, and tanker scheduling means that Vietnamese aviation will likely operate under constrained conditions well into the second quarter of 2026. The peak travel season around the 30 April and 01 May holidays and the summer period could face significant capacity reductions if supplies are not restored.