UAE’s OPEC exit may trigger projected petrol hike

Motorists should brace for higher costs at the pump next week as industry data points to a significant price hike for both diesel and gasoline, potentially ending a brief period of relief for diesel consumers.

Based on the first two days of trading, an industry source said Wednesday that diesel prices may rise by P1 to P3 per liter, while gasoline prices are expected to follow suit with a projected increase of P1 to P2 per liter.

The anticipated spike follows a seismic shift in global energy markets after the United Arab Emirates (UAE) announced its departure from the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ alliance.

The move ends the UAE’s nearly 60-year membership and removes the organization’s third-largest producer from the established quota system.

Analysts suggest the immediate impact of the UAE’s exit is bullish for prices. The departure reduces coordinated supply buffers during a period where global spare capacity is already strained, further exacerbated by ongoing disruptions linked to the Hormuz crisis.

While the short-term outlook remains high, the medium-term impact could turn bearish for the market. Without OPEC constraints, the UAE will gain the flexibility to independently increase production, which could eventually lead to lower global prices as more supply becomes available.

This week’s price movements remained mixed according to data from the Department of Energy (DoE).

Gasoline increased by P0.53 per liter across all variants, while diesel and kerosene saw significant drops of P12.94 and P15.71 per liter, respectively. The projected hike for next week would mark the second consecutive week of increases for gasoline and would snap a three-week streak of rollbacks for diesel.

Despite the volatility in international trading, the DoE assured the public that domestic supply remains stable.

As of 24 April, the Philippines maintained approximately 54 days of fuel inventory. Current gasoline stocks are estimated at nearly 54 days, while diesel stands at 55 days. Kerosene inventory remains significantly higher at approximately 169 days.

Officials cited that these ample domestic supply levels have helped cushion the local market and indicate sufficient reserves to meet demand in the near term.