Oil prices down on Iran deal

OIL firms rolled back prices as news of a tentative deal that could enable increased oil exports from Iran hushed the international market.

In separate advisories issued Monday, Petron, Shell, and Seaoil said they would trim gasoline prices by P0.65 per liter, diesel by P0.15 per liter, and kerosene by P0.20 per liter from 12:01 a.m. on April 7.

PTT Philippines and Eastern Petroleum will impose similar rollbacks for gasoline and diesel from 12:01 a.m. Phoenix Petroleum and TOTAL Philippines will start at 6 a.m. The four firms do not sell kerosene products.

Other oil firms have not released formal advisories but are expected to implement the same price adjustments.

Department of Energy Undersecretary Zenaida Monsada said in a briefing that prices were climbing early last week before the Holy Week break due to concerns over violence in Yemen. However, prices fell towards the weekend as demand fell on hope that Iran will be able to boost oil exports under a tentative nuclear deal with the U.S. and other world powers.

There are also expectations of recovering shale oil inventories in the U.S., she said.

Under a tentative deal between Iran and six world powers including the U.S., the former would temper its nuclear program in exchange for the lifting of sanctions against it.

Traders seem focused on whether the deal pushes through since the lifting of sanctions could mean increased oil exports from Iran in an already saturated oil market and the opening of the country’s oil fields to foreign investment.

With this week’s adjustments, gasoline prices will have had a net increase of P0.70 per liter while diesel prices have had a net decrease of P1.15 per liter since January 2015.

Last week, oil firms raised the prices of gasoline (by P1.10 per liter), diesel (P0.60 per liter), and kerosene (P0.80 per liter). The week before, there was a downward price adjustments of P1.10 per liter for gasoline, P0.95 per liter for diesel, and P0.90 per liter for kerosene.

Price decreases were more consistent in late 2014. Oil prices dropped dramatically in the second half of 2014 following mixed price signals in the first half.

In early 2015, oil market analysts predicted continuing overall weakness in demand but also noted the rise in demand for oil storage as many firms sought to take advantage of the low oil prices to turn a profit when prices climbed. AU