Phl-Iran oil talks spark passage hopes

The Philippines is negotiating with Iran to ensure safe passage for oil shipments through the Strait of Hormuz, following Wednesday’s meeting between Foreign Affairs Secretary Ma. Therese “Tess” Lazaro, Energy Secretary Sharon Garin, and Iranian Ambassador Yousef Esmaeilzadeh.

Presidential Communications Office Undersecretary Claire Castro shared key updates, noting, “Amb. Esmaeilzadeh mentioned they have been awaiting our outreach and reaffirmed their strong willingness to assist the Philippines with our specific requests. We agreed to course all detailed requests through official diplomatic channels to expedite processing.”

Castro added that Lazaro requested Iran formally designate the Philippines as a “non-hostile country” to ensure safe passage for PH-flagged vessels and oil shipments. “This is vital for the protection of our seafarers and our energy supply. DoE is finalizing the necessary details for immediate transmission,” she told reporters.

“Sec. Lazaro expects to speak with the Iranian Foreign Minister tomorrow to personally secure these commitments at the highest level,” Castro said. “The meeting was exceptionally warm and open. Given their stated readiness to cooperate, we are highly optimistic about a favorable outcome. Sec. Lazaro and Sec. Garin reported this immediately to the President.”

The urgency stems from the country’s 51-day fuel reserves (LPG at 34 days), with Iran controlling Hormuz access via a “safe corridor” for approved non-hostile vessels — nations like India, China, and Malaysia reportedly paying $2 million transit fees. This aligns with Sen. Sherwin Gatchalian’s Senate PROTECT report urging fuel rationing to extend supplies.

At home, pressure is building.

A Senate ad hoc committee has urged the DoE to prepare a fuel rationing plan to stretch the country’s buffer stock and cushion the impact of potential supply disruptions.

In its preliminary report, the Senate PROTECT Committee chaired by Sen. Sherwin Gatchalian recommended extending the current 51-day fuel inventory — enough until around May 17 — by as much as 90 days or longer through demand management.

“To extend the number of days, let’s prepare for rationing. In fact, if we still cannot secure more than 10 days, my advice is to ration [fuel] for non-essential services,” Gatchalian said.

Under the proposal, fuel use would be limited for non-essential activities such as leisure, while ensuring steady supply for critical services including hospitals, emergency response, police operations, and coast guard patrols.

The idea isn’t without precedent. The Philippines imposed fuel rationing during the 1973 global oil crisis. Some economists now argue that early intervention could prevent a sharper supply shock, noting that the country imports 95 to 98 percent of its oil — mostly from the Middle East — making it among the most vulnerable in ASEAN.

Still, Garin has pushed back on the proposal, even as the DoE retains the authority under the DoE Act (RA 7638) to impose rationing, load curtailments, and usage restrictions in times of critically low supply.

Senate estimates suggest that rationing could significantly extend fuel availability. In extreme scenarios where no new shipments arrive, cutting demand could stretch supplies to the end of the year — though this would require steep reductions of up to 81.7 percent.

“While it may not yet be necessary to impose such severe rationing requirements under present circumstances, the DoE may consider implementing a more modest rationing regime,” the report said.

Lawmakers are also weighing broader interventions, including a price cap on fuel as a last resort. But Garin noted that pump prices cannot be directly regulated under the Oil Deregulation Act (RA 8479), which removed government control over pricing.

The crisis has reignited calls to amend or repeal the law, though President Ferdinand Marcos Jr. has so far remained cautious.

To cushion the economic blow, senators are also eyeing a supplemental budget or a potential Bayanihan 3 measure. Fuel subsidies alone could require between P7.6 billion and P61 billion, with worst-case scenarios pushing funding needs up to P400 billion.

With global supply routes under strain and domestic reserves ticking down, the government is now balancing diplomacy abroad with contingency planning at home — hoping to stay ahead of a crisis that could hit both fuel prices and the broader economy.