Manila: Domestic oil prices are anticipated to rise by up to PHP2.25 per liter in the coming week due to increasing prices in the international market.
According to Philippines News Agency, Leo Bellas, president of Jetti Energy, communicated to journalists on Friday that diesel prices are projected to increase between PHP1.75 and PHP2.25 per liter, while gasoline prices are expected to rise between PHP1 and PHP1.50 per liter. Bellas attributed the climb in oil prices to a resurgence in the geopolitical premium, driven by the dimming prospects for a diplomatic resolution to the US-Iran conflict and the normalization of navigation through the Strait of Hormuz.
Bellas noted that the expiration of the mid-June US-Iran memorandum of understanding and both parties' intentions to adopt a firmer stance have led markets to factor in the possibility of a prolonged crisis. He highlighted additional factors contributing to the higher oil prices, including risks to Russian supply following Black Sea loading disruptions. Concerns over the reliability of replacement sour crude to offset the reduced availability from the Middle East also play a role.
Bellas emphasized that the strength of diesel prices is supported by the still-fragile physical balances. Despite the improving replacement supply from increased outflows from China, concerns persist over low inventories, reduced Middle Eastern availability through the Strait of Hormuz, and constrained exports from Russia. He noted that ongoing military actions in the Middle East are a primary factor influencing oil price movements. These actions have led to curtailment of crude feedstock exiting the Strait of Hormuz and disrupted flows from the alternate Red Sea route. However, further price increases are moderated by higher regional supplies due to rising outflows from India and China.
Bellas also pointed out that continuing attacks on Russia's refining sector are further tightening global product supplies, contributing to the anticipated increase in oil prices in the Philippines.
