The motoring public will likely face higher transport and fuel costs next week as pump prices are expected to rise, with oil companies set to announce adjustments on Monday for implementation the following day.
On Friday, Rodela Romero, director of the Department of Energy’s Oil Industry Management Bureau, said oil prices climbed for three straight sessions this week due to global supply risks.
“Oil rallied for three straight sessions as traders priced in weather-driven United States supply disruption that shut in as much as 2 million barrels per day of output; slow recovery of Kazakhstan’s Tengiz field after a fire or power issue; rising Iran risk premium; and the Organization of the Petroleum Exporting Countries and allies’ policy to pause output hikes,” Romero said.
As such, she said gasoline may increase by “more or less P0.10,” diesel by “more or less P0.85,” and kerosene by “more or less P0.45,” noting that these estimates exclude the oil company’s operating cost and other premiums.
Prices could rise more sharply
Jetti Petroleum Inc. president Leo Bellas said fuel prices could rise more sharply, based on his estimates that include premium costs and other expenses.
“Price movement indication for the week of 2 February based on this week’s trading and forex average first four days only versus last week’s full week average shows diesel may rise by P1.30 to P1.50, while gasoline may increase by P0.50 to P0.70,” Bellas said.
He said prices are being driven by geopolitical risks and supply disruptions.
Geopolitical and military risk
“Elevated geopolitical and military risk in the Middle East amid rising US-Iran tensions, including new sanctions on Iran’s shadow fleet and a visible US force deployment, have increased the uncertainty around Iranian supply continuity and broader stability in the region, providing a significant upside support to crude prices,” he said.
“Also supporting prices is the ongoing outage at Kazakhstan’s biggest oilfield, which continues to physically tighten near-term supply as a large volume of crude is kept offline, while a major US winter storm has curb oil and gas supply, tightening near-term supply and injecting short-term upside risk into crude markets,” Bellas added.
He said diesel and middle distillate prices are rising “due to rising supply concerns as the EU import ban on refined products from Russian-origin crude could disrupt flows and tighten the physical market,” while “for gasoline, limiting the upside to prices is the healthy regional supply and stock inventory.”