Philippines Braces for Significant Fuel Price Hike Next Week Amid Supply Concerns

Motorists in the Philippines are bracing for another significant fuel price adjustment next week, with projections indicating an increase of over P6 per liter. This comes as concerns over potential oil supply disruptions intensify, impacting benchmark prices across the Asia-Pacific region. Jetti Petroleum president Leo Bellas projected that diesel prices could surge by P6 to P6.50 per liter, while gasoline prices might increase by P5.50 to P6 per liter by July 28. These forecasts are based on the four-day average movement of the foreign exchange rate and the Mean of Platts Singapore, a crucial benchmark for refined petroleum products in the Asia-Pacific markets. While the projected increase could fluctuate slightly with one trading day remaining, a rollback is considered highly unlikely. Bellas attributed the sharp rise in global oil prices to heightened concerns over supply disruptions, particularly following the closure of the Strait of Hormuz. This vital shipping route typically handles about 20 percent of global oil and gas supplies. The risks have expanded beyond the Persian Gulf, with increased security threats in the Bab el-Mandeb Strait, a critical maritime chokepoint connecting the Red Sea, the Gulf of Aden, and the Indian Ocean, further fueling fears of disruptions along major trade routes. "Refinery disruptions and further constraints on Middle Eastern and Russian supply are keeping middle distillate supplies tight and prices elevated," Bellas stated. In response to the looming price hikes, economic managers have indicated their readiness to consider additional relief measures if global crude prices remain elevated. Finance Secretary Frederick Go mentioned that the Development Budget Coordination Committee might recommend another suspension of excise taxes on kerosene and liquefied petroleum gas (LPG) if the average Dubai crude oil price exceeds $80 per barrel for 30 consecutive days, as stipulated by law. "If the price of Dubai Crude exceeds $80 for a period of 30 days, then, if you ask me, it’s very likely we will recommend a similar suspension on LPG and kerosene," he told reporters. The Marcos administration had previously lifted its temporary excise tax suspension on select fuel products after the average Dubai crude oil price fell below $80 per barrel from June 1 to 30. Go clarified that the suspension would likely be limited to kerosene and LPG, explaining that economic managers had previously determined that suspending excise taxes on diesel and gasoline would offer minimal relief due to prevailing market dynamics. Meanwhile, the Department of Energy (DOE) has also implemented measures to mitigate the impact of higher fuel prices on consumers and public utility vehicle (PUV) drivers. Energy Secretary Sharon Garin reiterated her call for Congress to revisit the decades-old Oil Deregulation Law, which fully liberalized the country’s oil industry. "Considering that under the law, all these companies and the system are designed to be privately market-driven. But if Congress changes it, then there will be a new direction for them," Garin said. The DOE recently reinstated stricter fuel pricing rules, capping price increases and setting minimum rollback requirements. Under these new limits, diesel prices can rise by no more than P10.68 per liter, while increases for kerosene and gasoline are capped at P11.77 and P3.65 per liter, respectively. Garin urged oil companies to spread out the adjustments to ease the impact on motorists. Source: Philstar Nation