P3/liter fuel price hike possible as oil shipping risk grows – DOE

FUEL pump prices could rise by as much as P3 per liter next week as Middle East tensions raise risks to oil shipments, the Department of Energy (DOE) warned on Monday.

- JED MACAPAGAL

Rino Abad, director of the DOE's Oil Industry Management Bureau, said this week's increases may not yet be the peak of the market's reaction to the widening Middle East conflict and missile strikes across the region.

In a conference call with reporters, Abad said there have been no reports of oil producers withholding exports, but uncertainty over the safety of cargoes moving through the Strait of Hormuz is hampering shipments and lifting risk premiums.

Safe passage through the strait is crucial because more than 20 percent of global oil and gas exports use the route.

As a net fuel importer, the Philippines has little control over global price trends, Abad said.

Talks with stakeholders

“Just in case we experience again big-time adjustments next week, we will talk to stakeholders if they can stagger the implementation. We have already done this before when adjustments hit a total of P3 per-liter increase. It might also be a similar rate that can be the basis for this option,” Abad said.

He said the DOE will engage fuel retailers on the option of staggering an unusually large increase to soften the immediate impact on consumers.

Abad said the government is ready to roll out fuel subsidies for sectors directly affected by higher pump prices, particularly transport and agriculture.

Subsidy trigger

He said Dubai crude was trading at about $70 to $71 per barrel as of Monday.