Oil crisis and Marcos predicament

The war in the Middle East has triggered global uncertainty, affecting even nations far removed from the conflict. Disruptions in oil supply have strained industries and transport systems, raising fears of economic instability and social unrest.

The Philippines is not spared. The government has declared a national emergency, with fuel reserves projected to last only until the end of June. President Ferdinand Marcos acknowledged the country’s limited influence over global oil supply and prices, offering little reassurance to a public already burdened by economic strain and concerns over widespread corruption that has depleted state resources.

As I write this piece the cost of diesel fuel in Singapore is Php163.50 per liter and Php119.20 in the Philippines. In Davao City where I live, some fuel stations sell V-Power diesel at Php130 plus per liter. The rest of the countries are significantly lower. Cambodia diesel fuel sells at Php93.00; Vietnam at Php70.00; Thailand at Php63.00; Indonesia Php51.20; Malaysia at Php27.50.

For Singapore which with a gross domestic product per capita of around $90,700 the price difference still makes fuel cheaper than Philippines with a GDP per capita estimated at $4,000.00 based on the International Monetary Fund.

What makes the crisis more complex in the Philippines is the country’s feeble leadership and convoluted foreign policy.

Towards the end of the term of former President Rodrigo Duterte, the Philippines and China were negotiating for a joint venture to explore and develop the oil and gas deposits in the disputed West Philippines Sea.

The proposed deal comprehends of a 60/40 sharing agreement in favor of the Philippines. They were in the process of fine-tuning the agreement to dovetail with the constitution when Duterte bowed out of office.

In a surprising shift, President Ferdinand Marcos Jr. scrapped the proposed agreement with China and, in his first major foreign policy move, moved closer to the United States under President Joe Biden, opening nine Enhanced Defense Cooperation Agreement (EDCA) sites for US use and the construction of military storage facilities.

He effectively set aside the bilateral approach pursued under former President Rodrigo Duterte and instead adopted a more confrontational stance toward China, including efforts to assert claims over Scarborough Shoal.

Marcos’ criticisms of China intensified, echoed by the strong rhetoric of PCG spokesman Jay Tarriela and further amplified by some senators who even called for the closure of the Chinese embassy. Adding to this, AFP Chief Gen. Romeo Brawner made a bold statement that the military was prepared to engage in a 30-day war.

Against this backdrop, Marcos later sought China’s assistance for oil supply, setting aside earlier tensions. China, which maintains oil stockpiles and stable ties with Iran, has access through the Strait of Hormuz, and discussions on a possible joint oil and gas venture in the West Philippine Sea were revived.

However, these efforts have been complicated by conflicting statements from within his own ranks. During negotiations, AFP spokesman Commodore Roy Vincent Trinidad publicly remarked that the Chinese Communist Party is “not a reliable partner,” undermining diplomatic efforts.

Amid the uncertainty, some oil firms and local governments have taken independent steps to secure fuel supplies. Petron Philippines, for instance, accepted a delivery of 2.48 million barrels of crude oil from Russia, with the tanker reportedly bearing the name “Sara Sky.”