Crude oil prices might break the $80-per-barrel threshold in the coming months amid threats to production capacity, exacerbated by depreciating currencies in developing countries and the effects of trade disputes among global economic giants.
According to the International Energy Agency, the oil market is entering “a very crucial period” considering adverse production outlook in Venezuela, Libya and Iran.
“The situation in Venezuela could deteriorate even faster, strife could return to Libya and the [remaining days leading] to Nov. 4 will reveal more decisions taken by countries and companies with respect to Iranian oil purchases,” the IEA said in a report. The US’ sanctions against Iran’s oil exports are to be implemented on Nov. 4, threatening an outflow that could reach as high as 2.7 million barrels a day (mbpd).
“It remains to be seen if other producers decide to increase their production,” the IEA said. “The price range for Brent [crude] of $70 per barrel to $80 per barrel in place since April could be tested. Things are tightening up.”
Brent crude was tagged at $79.74 on Sept. 14, the highest since hitting a 47-month high of $79.84 on May 23.
Closer to the Philippines, the price of Dubai crude reached $77.10 per barrel on Sept. 12 after dipping to $45.89 in July 2017.
The IEA said oil demand was expected to increase at 1.4 mbpd in 2018, and faster at 1.5 million mbpd in 2019.
“As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the US dollar raising the cost of imported energy,” the agency said. “In addition, there is a risk to growth from an escalation of trade disputes.”
In the Philippines, rising fuel prices have helped boost inflation to a nine-year high of 6.4 percent in August.
So far this year, prices of diesel have gone up 25 times but have gone down by 11 times, resulting in a net increase of P11.80 per liter.
Also, prices of gasoline have gone up 26 times but have gone down by 10 times for a net increase of P11.47 per liter.
Kerosene prices have gone up 23 times and down by 11 times for a net increase of P11.26 per liter.