The domestic prices of 92-RON, the most commonly used grade of gasoline in Vietnam, increased by 1.9 percent to VND24,570 (US$1.16) a liter on July 17 night.
An increase of VND460 per liter makes the prices surpass the all-time high on March 28 when gasoline saw a 6 percent increase.
Fuel prices have seen four hikes this year, and the latest is the third in a row in two months.
The prices of 95-RON gasoline was also up by 1.9 percent to VND25,070 per liter.
The Ministry of Finance said average prices of 92-RON gasoline for the last 30 days in international markets have seen "an upward trend" and been at "high levels," standing at $117.47 per barrel on average.
For now, every liter of 92-RON sold is subsidized with VND300 taken from the fuel price stabilization fund, a rainy day fund that is raised when businesses make profits. As of the end of June the rainy day fund had around $2.6 million left, according to the finance ministry.
The ministry said it could not cut fuel import tariffs further, and it decided to cut the profit rate which is used to calculate the base fuel prices by two third to VND100. Fuel retailers base on these base fuel prices to calculate their own retail prices.
Even after the latest hike, retail fuel prices in Vietnam are still lower than the international prices by VND426-465 per liter, according to the ministry.
Also on Jul. 17, retail prices of diesel have gone up by VND470 to VND22,260-22,310, while the price of kerosene rose VND420 to VND22,020. Mazut fuel oil prices stay unchanged at VND18,670-19,070.
Inflation in Vietnam rose 2.4 percent in the first half of this year. The government aims to keep inflation at 6.5-7 percent this year, while the World bank forecast prices to rise 8.2 percent during the same period. The steep deceleration in year-on-year inflation from 18 percent in December 2011 to 6.7 last June was largely a result of the government's measures to control prices.
Vietnam still has to rely largely on fuel imports, as its sole oil refinery Dung Quat can meet just thirty percent local demand.
Another project, the 200,800-barrel-per day Nghi Son oil refinery, is under construction and projected to start operations in 2017 to take up the local supply to 70 percent of the country's requirements.
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