Concerned about soaring oil prices at the end of the year

The global price ranges from more than 88 USD per barrel to more than 94 USD per barrel. Experts predict that a supply shortage will drive oil prices to go up to 100 USD per barrel by the end of the year. The impact of oil exporting countries such as Saudi Arabia and Russia deciding to reduce oil inventories and extend oil production cuts until the end of this year is attributed to the rise in oil prices.

According to analysts, oil prices will not only stop at $95 per barrel, as previously predicted but will soar to $100 per barrel by the end of the year due to a lack of supply.

Since 16:00 on September 21, domestic gasoline prices have skyrocketed. E5RON92 gasoline has grown from 23,471 VND per liter up to 24,190 VND per liter; RON95-III gasoline has increased from 24,871 VND per liter to 25,740 VND per liter. The majority of types of oil have also been bullishly adjusted. Specifically, the price of 0.05S diesel has increased by 540 VND per liter, to 23,590 VND per liter; kerosene has climbed by 630 VND per liter, to 23,810 VND per liter; and 180CST 3.5S fuel oil has gone up by 140 VND/kg, to 17,840 VND/kg.

The operator had to set up the Petroleum Stabilization Fund at 300 VND/liter for most items, except 180CST 3.5s fuel oil, to get the above price. Thus, gasoline prices have changed 26 times since the beginning of the year, with 16 increases, 6 decreases, and 4 remaining unchanged.

Gasoline prices are experiencing an upward trend, causing public concern about inflation control at the end of the year. In an interview with the press, economist Vu Vinh Phu stated that domestic gasoline prices should only range between 19,000 and 22,000 VND. When the price of gasoline exceeds 22,000 VND, management must be cautious. The use of the Petroleum Price Stabilization Fund is advantageous and should be taken into account.

Gasoline prices have experienced an upward trend, causing public concern about inflation control at the end of the year.

According to this expert, fluctuations in gasoline prices have a significant impact on the input costs of manufacturing enterprises, particularly large oil-consuming industries, and thus exert considerable influence on the price of finished products. As a result, the rise in gasoline prices must be contained at all costs.

Cautious in managing monetary policy

It is the public concern that rising oil prices undoubtedly cause inflation. If inflation is not under control, the fact that central banks keep raising interest rates or keeping them high for an extended period may harm the economy.

Concerns are being expressed as inflation in the United States and other major economies begins to rise. This puts pressure on the Federal Reserve System (FED) monetary policy, though the FED may stop raising interest rates before the market forecast. According to the most recent data from the US Department of Labor, the August CPI consumer price index rose 0.6% from the previous month and was 3.7% higher than the same period last year.

This is the year's highest monthly increase, demonstrating the visible impact of higher oil prices. This may cause the FED to maintain a high interest rate of 5.25% - 5.5%, or to increase in the near future, causing the dollar to strengthen. The Dollar Index is now above 104 points, up more than 4.6% in the last two months.

The fact that the FED keeps its operating interest rate at a high level and can tighten monetary policy further, combined with unpredictable international developments, continues to put pressure on Vietnam's exchange rate and currency movements.

The State Bank of Vietnam (SBV) faces the challenge of forecasting the risk of inflation in order to manage interest rates in accordance with the macro balance, stabilize cash flow, and achieve monetary policy objectives. In the context of rising global energy prices, the SBV stated that it cannot be subjective about inflationary pressures.

CPI went up by 0.88% in August 2023 compared to the previous month, with the transport group price index increasing the most among the 11 major commodity groups, increasing by 3.85%. According to Pham Quang Anh, Director of the Vietnam Commodity News Center, the risk of global inflation returning, as well as high gasoline and oil prices, will have a significant impact on the domestic macroeconomic situation. The Fed is willing to raise interest rates this year, allowing the dollar to strengthen.

Meanwhile, the SBV maintains a loose policy to stimulate economic growth. This is the primary source of exchange rate pressure. All of the above will affect the direction of monetary policy for the rest of the year.

The question is how petroleum can no longer be a factor in the increase in the CPI. In reality, rising fuel prices are the main reason for the growth in the CPI. Therefore, it is imperative to find a solution to stabilize gasoline prices soon.