Domestic pump prices are expected to increase by as much as P2.25 per liter next week as international oil prices climb amid renewed geopolitical risks and supply concerns.
Jetti Energy president Leo Bellas said Friday that based on price movements as of Thursday, diesel prices could rise by P1.75 to P2.25 per liter, while gasoline prices may increase by P1 to P1.50 per liter.
Bellas attributed the expected increase to a rebuilding of the geopolitical premium in global oil markets as prospects for a diplomatic resolution to the US-Iran conflict and the normalization of navigation through the Strait of Hormuz weaken.
“With the expiration of the mid-June US-Iran MOU (memorandum of understanding) and both sides expressing intentions to take a harder line, markets are pricing in the possibility of a prolonged crisis,” Bellas said.
He said the market is also factoring in risks to Russian oil supplies following disruptions in Black Sea loading operations and concerns over whether replacement sour crude can offset reduced availability from the Middle East.
Diesel prices remain particularly firm because of fragile physical supplies despite increased replacement supply from China, Bellas said.
He cited concerns over low inventories, reduced Middle Eastern oil availability through the Strait of Hormuz and constrained Russian exports as additional factors supporting diesel prices.
Bellas said continued military activity in the Middle East remains the main driver of oil price movements because of disruptions to crude shipments through the Strait of Hormuz and the alternate Red Sea route.
He said higher supplies from India and China have limited further price increases.
“Continuing attacks on Russia’s refining sector are further keeping global product supplies tight,” Bellas added.
The expected increase would mark another adjustment in domestic pump prices, with local oil companies expected to announce their respective price movements next week.
Photo courtesy of FOX 59
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