Iran Conflict and Vietnam’s Economy: Early Impacts on Energy Costs, Logistics, and Export Supply Chains

While Vietnam remains geographically distant from the conflict between the US, Israel, and Iran, economic linkages to global energy markets, aviation routes, and logistics chains mean that spillovers are already emerging. Rising commodity prices and disrupted transport routes are flashing early warning signals for Vietnamese businesses and policymakers.

Aviation and passenger travel disruptions

Find Business Support

Transform Information into Strategy with Tailored Intelligence

The conflict has led to airport closures and the rerouting of international flights, with immediate consequences for Vietnam’s aviation and tourism sectors:

• Airspace restrictions and closures over the Middle East have disrupted numerous flights connecting Vietnam to European and Middle Eastern hubs.
• According to the Vietnam Civil Aviation Authority, over 4,400 passengers flying on Middle Eastern carriers such as Qatar Airways, Emirates, and Etihad have already been affected by cancellations or rerouting.
• Many Middle Eastern carriers have suspended service to the region, stranding passengers and complicating flight schedules. At a global level, thousands of flights have been canceled, and major hubs like Dubai and Doha remained closed or heavily restricted.

Going forward, Vietnam’s tourism and aviation sectors are expected to face consequential impacts from the new conflicts:

• Tourism flows from the Middle East, and onward transit travel may contract in the short term.
• Airlines operating through these hubs face increased operational costs due to rerouting and higher fuel consumption.
• Delays and cancellations create customer experience issues and potential revenue losses for Vietnam’s carriers, indirectly tied to cargo and passenger flows.

Energy markets and cost pressures

One of the most direct economic transmission mechanisms is through global energy prices. The Strait of Hormuz, a strategic chokepoint for crude oil and liquefied gas, accounts for roughly 20 percent of global seaborne oil trade. Recent tensions have raised the risk of disruption in this corridor.

• Crude oil prices have jumped sharply. Brent crude climbed to around US$73 per barrel on Friday, February 27, 2026. This is the highest price since mid-2025, representing an approximately 20 percent year-to-date increase.
• Analysts warn that if disruptions persist, prices could approach or exceed US$100 per barrel, potentially lifting global inflation by 0.6–0.7 percentage points.
• Production increases agreed by OPEC+, about 206,000 barrels per day, are considered insufficient to offset potential supply bottlenecks.

Vietnam is a net importer of petroleum products. Sustained higher oil prices would raise input costs for:

• Manufacturing and industrial production
• Transportation and logistics
• Consumer fuel prices

This would put pressure on businesses that rely on petroleum or fuel-related inputs, including exporters with high transport intensity (e.g., electronics and garment sectors).

Logistics and export supply chains

Find Business Support

Boost Your Growth by Expanding into Asia’s Rapidly Growing Markets

The logistics channel is identified as the most sensitive transmission mechanism through which a prolonged Middle East conflict could affect Vietnam’s export economy. Vietnam’s export value chains are heavily dependent on maritime routes linking Asian production hubs to major markets in Europe and North America, and any disruption to those routes can raise costs and delay deliveries.

In an interview with Saigon Times, Associate Professor Dr. Nguyen Huu Huan, Vice Chairman of the Executive Board of the Ho Chi Minh City International Financial Center, outlined two scenarios for Vietnam’s economic growth and exports influenced by the Iran conflict.

Short-term conflict (1–3 months)

Under a scenario where tensions involving Iran remain elevated but do not escalate into broader regional war, impacts are expected to be contained and transitory:

• Insurance and freight costs may rise modestly due to temporary “risk premiums” charged on vulnerable routes.
• Exporters could face higher logistics costs that narrow profit margins as shipping costs tick upward for routes through or near the Middle East.
• However, if global supply chains remain intact and shipping lanes such as the Strait of Hormuz stay open, these cost effects are expected to be mild and short-lived.
• Vietnam’s GDP growth might slip by a modest 0.1–0.2 percentage points relative to baseline, while export growth could be about 0.5–1.5 percent lower due to slower order flows and slightly less competitive pricing.

This scenario assumes logistics disruptions do not fully cascade into global supply chain fragmentation.

Prolonged or escalated conflict (≥6 months)

If tensions widen or persist beyond six months, generating sustained risk to maritime security around the Middle East and vital chokepoints like the Strait of Hormuz and Suez Canal, the logistics channel could inflict much stronger economic effects:

• Shipping costs and war-risk insurance premiums could move to a new, higher baseline for multiple quarters, as carriers prefer longer, safer routes (e.g., around Africa), intensifying cost pressures for export firms.
• Logistics services, including ocean freight, container availability, and port transshipment, could become more expensive and less reliable, especially for sectors with just-in-time delivery models.
• Companies may be forced to incur additional costs for alternative routing, container repositioning, and inventory buffer stocks, which further squeeze margins.
• Under this prolonged disruption scenario, Vietnam’s GDP growth could contract by about 0.4–0.8 percentage points relative to baseline, and exports could decline by roughly 2–5 percent as cost impacts combine with reduced demand due to higher global energy prices and weakened purchasing power in key markets.

Sectoral vulnerability patterns

As the crisis impacts unfold, not all export sectors in Vietnam will be impacted equally:

• Heavy freight-dependent industries, such as textiles, footwear, furniture, and assembled electronics, are likely to absorb higher cost shocks due to extended transit times and rising insurance surcharges. In many cases, logistics currently accounts for a significant fraction of the total delivered cost, meaning even moderate surcharges materially undermine competitiveness.
• Perishable or time-sensitive exports could face elevated demurrage, spoilage risks, and inventory financing costs if transit times stretch.

Under the current circumstances, firms with deeper diversification into alternative transport routes or nearshore markets may be better insulated, as they can alleviate reliance on cross-Red Sea maritime corridors.

Competitive shifts and strategic responses

Find Business Support

Support Economic Development with Asia Trade and Investment Programs

While Vietnam has not experienced direct conflict spillovers, international shipping disruptions, rising energy prices, and aviation network shocks illustrate how geopolitical events can propagate through global economic linkages.

In an extended disruption, Vietnam may become less price-competitive relative to exporters located closer to Europe and North America, such as Mexico, Eastern Europe, or North African producers, which can deliver with shorter or less risky transit routes.

Dr. Nguyen Huu Huan emphasized that his baseline scenario remains that the conflict will de-escalate fairly quickly, causing only limited and temporary effects on the global economy and Vietnam’s exports. More severe risks would only occur if the conflict lasts longer than expected or expands in a way that disrupts strategic energy and maritime routes.

Based on these considerations, recommendations for businesses operating in Vietnam include:

• Energy hedging strategies and strategic reserves planning are becoming increasingly important.
• Companies may need to reevaluate supply chain nodes and diversify transportation routes.
• Exporters might need to redesign supply chains, incorporating more reliance on multimodal logistics (such as air, rail, or nearshore hubs) or stockpiling inventory to manage transportation risks.

Conclusion

The Iran conflict, though geographically distant, carries economic transmission channels to Vietnam predominantly through energy costs, aviation disruptions, logistics and supply chains, and financial market volatility.

Rising crude prices and transport rerouting are the most immediate risks affecting operational costs across multiple sectors. While full macro impacts depend on the duration and escalation of the conflict, key data points suggest clear areas for vigilance and strategic planning in Vietnam’s export-led economy.

For international investors, Vietnam's different localities offer favorable conditions across almost every sector, particularly as the country shifts toward higher value-chain manufacturing, high-tech industries, and innovation. Taking a closer look at Vietnam's provinces and investment destinations before committing capital can provide a decisive competitive advantage. A tailored market study, dedicated location selection, or business matchmaking can uncover factors that are often hard to assess—such as special incentives, skilled labor availability, and tax breaks.

Huyen Do

Manager, Business Intelligence Vietnam

Talk to an expert at vietnam@dezshira.com

Or request a consultation at +84 28 3930 2828

• Previous Article Accordo di libero scambio India-UE vs. EVFTA: uno sguardo comparativo al loro impatto strategico sull’espansione delle imprese UE
• Next Article