Middle East crisis threatens sharp fuel spike

Fresh tension in the Middle East could hit Filipino motorists with a spike in fuel prices, laying bare the Philippines’ heavy reliance on imported oil and its exposure to global market shocks.

Jetti Petroleum, Inc. President Leo Bellas said Monday that early Mean of Platts Singapore (MOPS) indications—the regional benchmark for the deregulated local oil industry—showed diesel jumping more than $10 per barrel and gasoline climbing over $5 per barrel. 

Bellas noted that these trends could translate to a P4 per liter increase for diesel and around P2 per liter for gasoline if they continue.

However, Dubai crude has yet to reach $80 per barrel, the threshold that automatically triggers a government-led fuel subsidy distribution. Dubai crude last closed at $68.34 per barrel. 

Bellas cautioned that while this week’s domestic prices have not yet factored in the Middle East tensions, next week could see a significant increase if current MOPS trends persist.

“The latest tension in the Middle East has not been factored in yet in this week’s domestic price movement. For next week, however, if the sole basis is today’s potential MOPS prices, a significant increase may happen due to the big jump in oil and refined products prices seen at the start of this week’s trading,” he warned. “Hopefully, prices will no longer go up above current levels.”

Despite the pump price hikes, Bellas said most fuel retailers maintain at least the minimum 15-day inventory, likely closer to 30 days. Still, he warned that a prolonged supply disruption could push crude past $100 per barrel, even if major consumers like China release reserves to stabilize the Asian market.

Local fuel retailers have already announced increases in pump prices, adding P1.90 per liter for gasoline, P1.20 for diesel, and P1.50 for kerosene. These follow last week’s hikes of P0.60 per liter for gasoline and P1.20 for both diesel and kerosene.

The Middle East tensions have also drawn warnings from consumer group Power for People Coalition, which urged authorities to take action to protect consumers from steep price spikes. 

The group emphasized that the Department of Energy and the Energy Regulatory Commission “must implement price control mechanisms to provide a reprieve to Filipino consumers,” noting that the country’s reliance on fossil fuels leaves it exposed to global shocks.

“The country is already heading into the summer season, usually marked by the highest electricity rates every year. With a volatile geopolitical situation that could further escalate, price control mechanisms must be the bare minimum in shielding electric consumers from sharp price hikes,” the coalition added.

In a separate advisory, Senate Energy Committee Vice Chairman Senator Win Gatchalian called for a revision of the fuel subsidy trigger formula for the public transport sector. He proposed shifting from a fixed price threshold to a percentage-based system, aiming to provide faster relief for public utility vehicle (PUV) drivers amid expected fuel price spikes.

Under the current Pantawid Pasada program, subsidies are released when world oil prices hit $80 per barrel. 

Gatchalian said a percentage increase in prices within a week should automatically trigger the release of funds for PUV drivers. He explained the rationale, noting the disconnect between oil price spikes and regulated fares:

“Oil prices rise quickly, but fares do not increase as fast because they are also regulated by the LTFRB. The ones caught in between are the PUV drivers.”

Gatchalian, who also chairs the Senate Finance Committee, said he plans to conduct oversight to identify the causes of past delays in the release of Pantawid Pasada funds.

According to Gatchalian, a percentage-based trigger would allow the government to act immediately during volatile market conditions, rather than waiting for prices to reach a fixed threshold.