The predicted high oil price would not only enhance share prices in the short term.

Positive impacts

For oil and gas sector, due to the combined effects of the current global supply constraint and geopolitical tension in Ukraine, Brent oil prices are projected to remain high in the oil and gas industry. The predicted high oil price would not only enhance share prices in the short term, but also improve the industry's long-term prospects by boosting E&P activity and bolstering the industry's fundamentals.

Regarding the steel sector, according to the World Steel Association (WSA), Russia and Ukraine produced 97.4 million tonnes of steel in 2021 and exported roughly 57 million tonnes. According to Eurofer, Russia and Ukraine are the 2nd and 4th major steel exporters to this region in 11M21, respectively, with roughly 21% of total import volumes. In 2021, the EU will be Vietnam's third largest export market. As a result, VNDirect predicts that Vietnam's top steel exporters will be able to boost their sales volume in the EU in the near future.

As far as the fertilizer sector is concerned, Russia accounts for 13 percent of global trade in important fertilizer intermediaries and over 16 percent of global trade in key finished fertilizers in the fertilizer sector. So, the sanctions imposed on Russia by the EU and the US will result in a global supply deficit, raising fertilizer costs. Fertilizer prices in Vietnam are influenced by global fertilizer prices. As a result, fertilizer prices are expected to rise, helping to boost gross profit margins in the face of rising input gas costs.

As for fishery products, the crisis between Russia and Ukraine may indirectly assist Vietnam's pangasius industry. EU sanctions against Russia may impede Russian commodity shipments in general, especially pollock, which is one of the primary alternatives for Vietnamese pangasius in the EU market. Each year, the EU imports 160,000 tonnes of pollock from Russia, accounting for 19% of total pollock imports in the EU. Meanwhile, in 2021, the EU was Vietnam's fourth largest export market for pangasius. "We believe the Vietnamese pangasius sector will be able to take advantage of this situation to increase its market share in the EU", VNDirect said.

Negative impacts

For the edible oil, because Ukraine is the leading sunflower oil supplier, prices for palm oil and soybean oil tend to rise as demand switches from sunflower oil to palm oil and soybean oil to meet short-term production needs. If the conflict is resolved quickly and Ukraine resumes sunflower oil exports, edible companies will be unaffected until the end of 2021, thanks to past contracts and high inventories. However, if this trend continues, edible oil producers' GPM in 2022 will be severely reduced.

Regarding animal feed, Russia and Ukraine are the world's first and third-largest wheat exporters, respectively, accounting for approximately a third of total global wheat commerce. Wheat prices have risen 17.8% from pre-conflict levels. Furthermore, Ukraine is the world's fourth largest grain exporter, accounting for 22 percent of global commerce, prompting corn prices to rise by 8.4 percent since the crisis began. Wheat and corn are two of the most important commodities in animal feed.

The temporary suspension of commercial flights to and from Russia and Ukraine may have a minor impact on the recovery of foreign passengers.

With regard to air transportation, the significant increase in oil costs has a negative impact on airline profit margins. In the short term, the temporary suspension of commercial flights to and from Russia and Ukraine may have a minor impact on the recovery of foreign passengers (Russian passengers accounted for about 5% of total international passengers prior to the pandemic).

In the gas-fired power sector, the rise in oil prices leads to higher gas input prices, which are then passed on to power prices. Due to the low Qc assigned, a higher electricity selling price diminishes gas-fired power's competitiveness and narrows its profit margin. The possibility of a delay in power projects involving Russian investors, such as thermal (Long Phu 1, Quang Tri), renewable energy (Vinh Phong), and others...

As for coal-fired power, in 2021, Russia will be Vietnam's third largest coal export market (approximately $527 million), primarily for thermal coal. According to the International Energy Agency, Russia will be the world's third largest coal exporter in 2020. As a result, VNDirect predicts that coal-fired power plants in Vietnam will experience a supply shortfall if switching suppliers is difficult in the immediate future. However, it foresees a minor impact because Vietnam consumes just approximately 12% of all exported coal.