From oil shocks to an electrification strategy

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From oil shocks to an electrification strategy

The conflict in the Middle East is delivering a major shock to global energy markets. For Vietnam, this is a timely reminder that energy security should be viewed not only from the supply side, but also from the demand side.

Cutting energy demand: the fastest, lowest-cost response

One of the clearest lessons from countries responding to the current energy crisis is the importance of prioritising short-term energy-saving measures. These are among the quickest and least costly options available, yet they can deliver immediate results in easing pressure on fuel consumption.

The International Energy Agency (IEA) has recommended a range of emergency measures, including expanding remote work, reducing traffic speeds, increasing public transport use and limiting non-essential travel. In practice, many countries have already adopted similar approaches.

In Thailand, government officials have been encouraged to wear short-sleeved shirts and set air conditioning temperatures at 26–27°C to reduce electricity use. Countries such as the Philippines, Pakistan, Sri Lanka and Egypt have introduced four-day work weeks or midweek rest days to reduce commuting demand. Myanmar has restricted vehicle use based on odd and even number plates, while Bangladesh has used fuel rationing mechanisms to help manage demand.

What these policies have in common is their ability to influence energy consumption behaviour quickly. Vietnam could consider similar measures, such as more flexible work arrangements in the public sector, adjusted office hours to ease peak-hour congestion, or minimum temperature settings for air conditioning in office buildings.

The conflict in the Middle East is delivering a major shock to global energy markets. (Image: Freepik)

Short-term fixes alone will not be enough

That said, short-term measures can only soften the immediate shock. Over the longer term, Vietnam will need policy and institutional reforms to embed energy efficiency more sustainably.

International experience shows that energy pricing and market mechanisms play a central role in shaping consumption behaviour. Several European countries have introduced price caps while simultaneously reducing fuel subsidies to encourage more efficient use. At the same time, they have invested heavily in improving energy efficiency in buildings, housing and industrial production, particularly as the residential sector can account for more than 50 per cent of the total energy consumption in some countries.

For Vietnam, this points to three key policy directions:

(1) gradually reform energy subsidies — that is, reduce or phase out state support that keeps the prices of petrol, diesel, electricity and gas below market levels, while doing so in stages to avoid sudden shocks for households and businesses;

(2) introduce mandatory energy efficiency standards for appliances and buildings; and

(3) encourage businesses to invest in energy-saving technologies through green finance and concessional credit.

Electrification: a strategic step to reduce oil dependence

This latest crisis has highlighted the risks of relying heavily on imported oil. In response, some governments and businesses have begun shifting towards electric vehicles and the use of electricity in cooking, transport and manufacturing to reduce dependence on fossil fuels.

Electrification offers three major advantages.

First, it reduces geopolitical dependence. Electricity can be generated from a wider range of domestic sources, including renewables, coal, gas and hydropower, helping to reduce a country’s vulnerability during oil import disruptions.

Second, it improves long-term cost stability. While oil prices are highly volatile, electricity costs, particularly from renewable energy, tend to be more stable over time.

Third, it supports green transition. The current energy crisis is making renewable energy more competitive compared to fossil fuels.

However, electrification will only deliver its full benefits if it is accompanied by a cleaner power mix. If electricity generation remains heavily dependent on coal, the environmental gains will be limited.

Electrification will only deliver its full benefits if it is accompanied by a cleaner power mix. (Image: Freepik)

Crisis as a catalyst for restructuring

The Middle East conflict is another reminder that energy security is no longer just a concern for the oil and power sectors. It is now a core pillar of macroeconomic stability and the resilience of the broader economy.

For Vietnam, an effective response will require a two-layered approach. In the short term, the priority should be flexible energy-saving measures that can help ease pressure on fuel demand and prices. In the longer term, the country will need a more durable strategy built on energy efficiency, institutional reform and the electrification of the economy.

This is not only a crisis response. It is also an opportunity to restructure Vietnam’s energy system to become more sustainable, more resilient and more self-reliant.

Story: Dr Nguyen Vinh Khuong, lecturer in Electronic and Computer Systems Engineering, RMIT University Vietnam

Media Release

Science and technology

14 April 2026

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