Fuel prices seen easing as Middle East strife simmers

Motorists refuel at a gas station in Paco, Manila. Oil prices rose by almost P5 a liter this week as the Israel-Iran conflict rages on. INQUIRER PHOTO / NIÑO JESUS ORBETA

MANILA, Philippines – A slight relief from surging local fuel prices remains possible as global oil prices dropped following signs of de-escalation in the Middle East (ME) conflict, according to a local firm.

Jetti Petroleum president Leo Bellas said initial estimates based on Monday’s trading in the Mean of Platts Singapore (MOPS) showed another upward adjustment in pump prices next week.

MOPS is the benchmark used for refined petroleum products. It showed that diesel and gasoline prices remain elevated.

READ: Oil prices tumble as markets shrug off Iranian rebuttal to US

Bellas said that if a similar level were monitored this week, it would translate to another round of increases in domestic prices, which could reach up to P1.65 per liter.

However, he noted that the tensions in the region “have somewhat de-escalated” even as Iran targeted the United States’ military base in Qatar.

He said investors were more concerned about an earlier threat by Iran to block the Strait of Hormuz, a crucial route for oil supply.

“With this development and following announcement by US President Trump that Israel and Iran have agreed to a ceasefire, prices fell sharply in early Asian trading,” Bellas told reporters in a message on Tuesday.

“Should this trend continue, we could see prices making an abrupt U-turn to easing down,” the official added.

This week, local fuel retailers are imposing as much as a P5.20 per liter hike in petroleum products.

Following talks with the Department of Energy, oil firms have agreed to raise prices in tranches of P2.60 per liter of diesel. The first has been done and the next one will take effect on Thursday, 6 am.

For gasoline, this week’s price hikes total at P3.50 per liter.

Alternative sources

Meanwhile, the Department of Energy floated the possibility of sourcing fuel from other countries, such as Canada, aside from the Middle East.

But Bellas said the best source of crude oil for the Philippines remains the Middle East.

While importation from other sources can also be considered, he said, “the cost to bring the crude oil from those other sources will definitely be higher vis-a-vis the Middle East.”

“Sourcing refined fuel products from Canada and the US is also possible. But the logistics cost will be a primary concern,” he said.

“The quality of crude oil varies depending on the source and can also be a factor if such can be used as feedstock by the refinery in the Philippines,” Bellas added.

Energy Undersecretary Alessandro Sales, who heads the Oil Industry Management Bureau, said the government has been keeping a close watch on developments abroad.

“We also urge them [companies] to exercise prudence in passing on cost changes to consumers. Much of the recent price volatility is being driven not by actual supply disruptions, but by speculative trading due to geopolitical uncertainties,” he added. INQ