China and Thailand halt exports amid Iran conflict, threatening aviation supply chains across Southeast Asia.
MARKET INSIDER – Vietnam’s aviation sector could soon face flight reductions as a growing jet fuel shortage threatens airline operations across the country. Authorities are warning carriers to prepare for potential cuts starting in April after two of Vietnam’s key suppliers—China and Thailand—halted exports of refined fuel products amid disruptions tied to the escalating Iran war.
The warning comes from the Civil Aviation Authority of Vietnam, which said there is a “risk of jet fuel shortages” affecting Vietnamese airlines in the coming months. Vietnam imports more than two-thirds of its aviation fuel, with roughly 60% traditionally sourced from China and Thailand, leaving the country particularly exposed to sudden supply disruptions in regional energy markets.
The potential shortage reflects broader ripple effects from tensions involving Iran, which have already disrupted global fuel flows and driven energy prices sharply higher. China recently instructed refiners to stop agreeing to new export contracts before introducing a full ban on refined fuel exports beginning March 11. Thailand followed with its own restriction on refined oil exports, including aviation fuel, with limited exemptions for neighboring countries.
Vietnam’s two largest aviation fuel importers—Petrolimex and Skypec—told regulators they can currently guarantee supply only through March. If the conflict continues to disrupt markets, authorities may be forced to prioritize essential domestic routes while limiting other air transport operations.
The supply shock is also colliding with surging global fuel prices. Jet fuel swap prices in Singapore, a benchmark for the region, are now trading around $157 per barrel, more than 50% higher than pre-conflict levels, according to LSEG data. Rising costs threaten airline profitability, potentially forcing carriers to scale back routes even if fuel remains available.
Vietnamese leaders have begun diplomatic efforts to stabilize supply. Foreign Minister Le Hoai Trung recently discussed energy cooperation with Chinese Foreign Minister Wang Yi, while Prime Minister Pham Minh Chinh has also urged Thailand to help address the emerging shortage.
Authorities are exploring alternative suppliers including South Korea, Japan, Brunei, and India. However, officials warn that sourcing replacement fuel quickly could prove difficult as global supply chains tighten.
For Vietnam—one of Asia’s fastest-growing aviation markets—the episode underscores how geopolitical conflicts can quickly ripple into transportation networks and economic activity. If energy disruptions persist, the aviation crunch could become another reminder that in today’s interconnected economy, a conflict thousands of miles away can reshape travel, trade, and business far beyond the battlefield.
