The Department of Energy (DoE) reports that the recent rise in fuel costs is due to concerns over potential conflict in the Middle East and a decrease in US commercial crude reserves.
“In a message sent through Viber, Rodela I. Romero, assistant director of the DoE Oil Industry Management Bureau, stated that the recent escalation of conflict in Gaza, including the bombing of a hospital on October 17th, has caused uncertainty and led to an increase in certain factors. These factors include the cancellation of a summit between Arab leaders and President Biden by Jordan, as well as Iran’s suggestion of imposing an oil embargo on Israel.”
On Monday, oil companies announced in separate advisories that pump prices will increase by P0.95 per liter for gasoline, P1.30 per liter for diesel, and P1.25 per liter for kerosene, effective today, Tuesday.
Caltex, Inc. planned to make changes to their prices at midnight, followed by Seaoil at 6 in the morning and Clean Fuel at 4:01 in the afternoon.
This week’s price changes mark the end of the downward trend for diesel, which had decreased in price for two weeks, and for kerosene, which had seen a decline in price for four weeks.
Last week, oil companies reduced the cost of diesel and kerosene by P0.95 per liter, while the price of gasoline increased by P0.55 per liter.
Ms. Romero stated that these advancements could potentially lead to interruptions in the supply from the largest oil producing region in the world.
In the initial portion, the majority of the Philippines’ unrefined oil came from the Middle East, with Saudi Arabia providing 50.2%, the United Arab Emirates providing 26.9%, and Iraq providing 22.9%.
According to Ms. Romero, the decrease in US commercial crude reserves suggests a rise in demand. Additionally, she noted that the Chinese economic data, which exceeded expectations, also contributed to the increase in oil prices.
According to Ms. Romero, if the demand for oil exceeds the supply, there is a chance of an increase in oil prices. However, this effect could vary depending on weekly changes in the global oil market. She refers to the Global Crude Oil Market Short Term Outlook Fundamentals, which indicates a deficit of 0.38 million barrels per day.
According to Ms. Romero, the Department of Energy (DoE) is promoting the implementation of discount programs by oil companies as part of their corporate social responsibility (CSR) efforts.
She stated that we asked for a list of the gas stations offering fuel discounts, promotions, and additional perks, and that we will upload it to the Department of Energy’s website for everyone to see.
Raymond T. Zorilla, the senior vice-president of external affairs for Phoenix Petroleum, Inc., stated that the market is currently keeping an eye on the Middle East.
“In a Viber message, he stated that although the conflict has not significantly affected the fuel supply, the market remains apprehensive as it observes the increasing tension in the midst of uncertainty. Hopefully, this will not spread to other major oil-producing countries.”
Economists predict that inflation will persist as the situation evolves.
According to Michael L. Ricafort, Chief Economist of Rizal Commercial Banking Corp, the recent rise in pump prices is considered relatively mild and has not had a significant impact on overall inflation.
He emphasized the significance of avoiding the expansion or escalation of the war in the Middle East, particularly in key oil-producing nations, in order to prevent a further increase in global oil prices.
According to Nicholas Antonio T. Mapa, Senior Economist at ING Bank N.V. Manila, the increase in gas prices has led to a reemergence of transportation inflation, resulting in a surge in overall inflation over the past two months.
In a Viber message, he stated that until a resolution is reached, we may continue to observe price increases in global energy.
The Philippine Statistics Authority reported that headline inflation increased from 5.3% in August to 6.1% in September.
The consumer price index for September showed a decrease from the 6.9% in September 2022, but still fell within the central bank’s predicted range of 5.3-6.1% for the month.
So far this year, the average inflation rate has been 6.6%, exceeding the central bank’s projected rate of 5.8% for 2023.