By Sheldeen Joy Talavera, Reporter
THE DEPARTMENT of Energy (DoE) is set to tighten fuel price guidance as fresh developments in the Middle East threaten to drive pump prices higher, its top official said.
Energy Secretary Sharon S. Garin said that renewed tensions in the Middle East are putting upward pressure on global oil prices amid concerns over possible supply disruptions.
“Threats to navigation through the Strait of Hormuz have underscored the vulnerability of one of the world’s most critical energy trade corridors, placing upward pressure — prices have gone up again — on international crude oil prices, and consequently, domestic pump prices are affected,” she said at a briefing on Monday.
Reuters reported oil prices surged more than 3% on Monday after renewed military strikes between the United States and Iran reignited concerns over energy shipments through the Strait of Hormuz.
“If things are still volatile, then we will no longer set a fixed range… It’s either a rollback or hike,” Ms. Garin said.
“Since the prices still seem to be very volatile, we decided here in the DoE that next week we will prescribe a specific number, no longer a range.”
For this week, the DoE still gave a range of price adjustments that will take effect on Tuesday. Fuel retailers can implement a rollback of at least P1 per liter or an increase of up to P1 per liter for gasoline. Prices of diesel and kerosene are set to increase by up to P4.62 and P4.22 per liter, respectively.
Seaoil Philippines, Inc. and Shell Pilipinas Corp. have announced they will raise the price of gasoline by P1 per liter, diesel by P4.60 per liter, and kerosene by P2.30 per liter.
Since the Philippines was placed under a national energy emergency in late March, the DoE has prescribed a range for weekly fuel price adjustments, setting a minimum rollback and a maximum increase that oil companies may implement.
However, as the international market began to stabilize, the government gave greater flexibility to fuel retailers by allowing them to adjust prices within a range.
Ms. Garin said they had earlier prescribed a range for pump price adjustments to ensure the viability of oil companies.
The Philippines is particularly vulnerable to global oil price shocks because it is a net importer of petroleum products, most of which come from the Middle East. The conflict between the US and Iran has heightened concerns over possible disruptions to shipments through the Strait of Hormuz, a critical oil transit chokepoint, raising supply risks and driving up global crude prices.
Asked to comment on DoE’s oil price outlook, Top Line Business Development Corp. Senior Vice-President and Chief Operating Officer Brigitte Carmel C. Lim said the recent escalation in the Middle East and persistent risks from the Russia-Ukraine conflict continue to cloud the outlook for the global oil market.
“These developments could make global oil prices (and consequently local pump prices) volatile in the near term,” Ms. Lim told BusinessWorld. “For now, we remain cautiously optimistic, but much will depend on how these geopolitical events evolve over the coming weeks.”
As of July 10, the country’s fuel inventory is equivalent to 47.84 days, increasing from 46.50 days previously.
The average inventory for gasoline is 48.17 days, while diesel has an average inventory of 45.69 days. Kerosene has an average inventory of 148.98 days, 80.09 days for jet fuel, 33.37 days for fuel oil, and 39.51 days for liquefied petroleum gas.
