Diesel Price Hike of Up to P4/Liter Seen Amid Mideast Tensions

MANILA, Philippines — Another fuel price increase is expected at the pumps next week amid renewed tensions between the United States and Iran over the strategic Strait of Hormuz. After four trading days in the regional benchmark Mean of Platts Singapore, an industry source said diesel prices could increase by P2 to P4 per liter next week. Gasoline prices are also likely to rise by as much as P1 per liter. Final price adjustments, which will take effect on July 14, will still hinge on the outcome of the last trading day. The source said global oil prices went up after Middle East tensions flared following Iran’s attack on vessels transiting the Strait of Hormuz outside Tehran’s approved shipping route. The conflict intensified after the US launched retaliatory strikes and revoked sanctions relief for Iranian oil exports. Following the latest exchange of attacks, US President Donald Trump declared the ceasefire with Iran “over,” though he indicated that negotiations could still resume. “The military strikes in the Middle East continue to expose the ongoing risk to supply, and the latest escalation in the US-Iran war has dimmed the prospect of having a lasting peace deal,” the source said. Even before the latest escalation, diesel and other middle distillate prices had already been rising due to tight supply and strong demand. Worries over a possible disruption in Russian diesel exports also continued to exert upward pressure on prices as Ukraine intensified drone attacks on Russia’s energy infrastructure. At the peak of the energy crisis in March and April, demand for petroleum products dropped by up to 25 percent, according to Energy Secretary Sharon Garin. But Jetti Petroleum president Leo Bellas is seeing a pickup in demand as the Strait of Hormuz has reopened to commercial traffic. “In our country, we see demand destruction, which happened actually in April, but the good thing is that demand has come back,” Bellas told One News’ “Money Talks” yesterday. “It’s a good sign, actually. It’s going up, particularly when classes have already started. But I think because prices are still relatively higher compared to pre-war levels, it’s not back to 100 percent yet,” he explained. Demand explains why diesel prices continue to rise despite downward momentum in the commodity markets. “Demand has been steadily growing, but supply has remained stagnant. Although we see flows coming out of the Middle East, they’re mostly crude and still en route. And the refining of those products could probably come in the next couple of days yet,” the Jetti official said. As for gasoline, demand in Northern Hemisphere countries is just starting to pick up while there’s a “balance” in Asia. “In the next couple of days, since global balance is really quite tight, we might see prices probably inch up a bit for gasoline,” Bellas said. — EJ Macababbad