The government is not ready to lift the energy emergency declaration despite signs of a breakthrough in United States/Iran peace talks, with Energy Secretary Sharon Garin warning that the crisis has evolved far beyond oil prices and continues to weigh on inflation, transport costs and household spending.

Not just an oil problem

“The emergency started with the oil problem, but right now it’s not just an oil problem,” Garin said on Monday. “It’s an inflation problem. It’s about the capacity of our people to spend and also its impact on agriculture and commodities.”

While the Department of Energy welcomed the prospect of the US and Iran’s coming to agreement with a 60-day ceasefire, Garin said it would be premature to declare the crisis over.

“We will have to meet and reassess whether the emergency is still needed because the oil industry may require less intervention, but other sectors may still be affected,” she said.

Highly exposed

The Philippines remains highly exposed to disruptions in the Middle East, which means the country is heavily dependent on oil passing through the Strait of Hormuz.

Energy Undersecretary Alessandro Sales said more than 90 percent of the country’s oil supply ultimately originates from the region.

The prospect of peace has already started pulling oil prices lower, according to Sales.

“Markets move faster. The market is already reflecting the anticipation for a deal to be signed,” he said, adding that local fuel prices could continue to decline if an agreement is finalized.

But any return to pre-war fuel prices remains a distant prospect.

Not instantaneous

“There’s room for prices to come down, but returning to pre-war levels will probably take another six to 12 months because restoring disrupted supply is not instantaneous,” Sales said.

A national energy emergency has been in place nationwide since March due to risks to the country’s energy supply and stability arising from the conflict in the Middle East.

The declaration allows the government to implement measures to cushion consumers and key industries from supply disruptions, fuel price spikes, and their broader impact on inflation