Gas price hike of up to P1.50 expected

AP FILE PHOTO

MANILA, Philippines — Gasoline and diesel products may increase by up P1.50 per liter this week amid fears the worsening sectarian crisis in Iraq may disrupt exports from the world’s No. 3 supplier of crude oil.

Pump prices are seen rising in the range of P1.10 to P1.50 per liter due to worsening Iraqi violence, an industry source said.

As early as Friday last week, the domestic oil market was abuzz with talk that prices of major fuel products may surge by more than P1 this week.

Oil firms are expected to make official announcements on the increase no later than Tuesday. It will have been the second straight increase due to supply concerns sparked by sectarian violence in Iraq.

Based on the benchmark Mean of Platts of Singapore (MOPS) average prices last week, local pump prices for gasoline and diesel are expected to increase by over P1 per liter, sources said. It may be recalled that in the week of June 16 to 20, the Iraq crisis sparked a P0.20 per liter increase in the price of gasoline P0.30 per liter in the price of diesel.

MOPS tracked the recent surge in world crude prices. The average price of gasoline grew by more than $4 per barrel this week compared to last and industry sources said this would significantly impact retail prices next week. The diesel average price increased by more than $3 per barrel over the same period.

Citing industry data, sources said the benchmark Dubai crude increased almost $3 per barrel to nearly $110 per barrel from June 16 to 19 against the previous week’s average of $106.60 per barrel. That was in the wake of militant Sunni group Islamic State of Iraq and Syria’s (ISIS) takeover of large areas of north and northwest Iraq, including the 300,000 barrel-per-day Baiji refinery. Located 250 kilometers north of the capital city of Baghdad, it is the largest refinery in Iraq.

While fuel products available in the Philippines are refined from Saudi crude oil, conflict in any oil producing country drives prices up in spooked markets, Energy Secretary Carlos Jericho L. Petilla said. Most of the Philippines’ fuel is imported, making the commodity highly vulnerable to international price shocks.

Iraq produces 3.3 million barrels of crude oil daily and is the second-largest producer in the 12-member Organization of Petroleum Exporting Countries or OPEC. It is  the third largest exporter of crude after Russia and Saudi Arabia.

Iraqi production represents nearly four percent of the world’s total daily consumption of 93 million barrels per day.

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