Surging crude oil prices worry BSP


The latest spike in oil price resulting from the standoff between Europe and oil-producer Iran has caught the attention of the Bangko Sentral ng Pilipinas, which acknowledged that the Dubai crude price has breached its assumption for the year.

BSP Deputy Governor Diwa Guinigundo said that when the central bank set its inflation target of 3 to 5 percent for this year and next, it assumed that Dubai crude would average between $90 and $110 a barrel.

Dubai crude, however, has been hovering close to $120 a barrel over the last few days and hit $118 Wednesday as the dispute between Europe and Iran over the latter’s alleged nuclear program caused market players to be concerned over potential disruptions in oil supply in the months ahead.

European Union officials have imposed a ban on oil imports from Iran starting July as a means to pressure the Middle Eastern country to stop its alleged nuclear program. Iran, estimated to account for about 4 percent of global oil supply, has denied making any nuclear weapons.

The Philippines is an oil import-dependent country, buying about 90 percent of its requirements from abroad. An increase in Dubai crude price pushes local pump prices and the cost of other basic commodities.

“Recent developments have seen oil prices shooting up precipitously. The European prospective ban of oil imports from Iran has fueled concerns about possible retaliation in terms of supply disruption,” BSP Deputy Governor Diwa Guinigundo said.

He said the BSP is keenly monitoring oil-price developments offshore as it works on ensuring inflation is kept within the target for this year.

The BSP, which cut policy rates earlier this year, had said that it maintained a policy of supporting economic growth as long as inflation was kept within target.

Guinigundo said that so far, the BSP still expected inflation to stay within the 3-5 percent target, but that developments abroad were being monitored.—Michelle V. Remo

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  • Ben

    The Biofuels Act of 2006 calls for blending ethanol as additive to gasoline
    to reduce the country’s dependence on imported fuels. But this law has a loophole that we see now, instead of supporting the home grown industries and farmers,
    the local industries are forced to import a large portion of the
    ethanol….defeating it`s purpose of decreasing fuel import….


    Make Phils. increase its Ethanol addditives to
    gasoline/oil products by locally producing ethanol and the refineries needed to produce them, from
    our natural resources like sugarcane, corn, cassava, jathropa etc. But if like our big oil companies, which also import their ethanol/alcohol requirement
    overseas this law will almost be useless, the only good to realize is the expensive gasoline if
    blended will be less pollutant to environment and we can stretch the value of our dollars, we should also entertain the idea of installing a strategic reserve of oil in cases of spikes like this now. The govt. must do something to
    push local farmers and big industries for the mass cultivation of required
    plants for this purpose or attract foreign investment for the refinement of
    these products….or else lumalabas talaga ang pagka-ningas cogon natin dahil sa profits…in short gahaman or hidden graft that PNoy is trying to expose, but just focused on former PGMA and Corona dahil sa Hacienda nya.

  • Concerned

    Instead of just worrying about it, why doesn’t the BSP use its influential powers to urge this government to start spending on infrastructure that are geared towards alleviating high oil prices. start with mass transit, better roads, etc.  the BSP can’t just make pronouncements from the pulpit, take responsibility!

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