The Philippines is experiencing a “speculative effect” in financial markets as tensions escalate in the Middle East following United States and Israeli attacks on Iran, with investors reacting to fears of possible disruptions in global oil supply rather than actual shortages, an international relations expert said Wednesday.
Speaking on DAILY TRIBUNE’s digital program Straight Talk, De La Salle University’s Department of International Studies professor Renato Cruz De Castro said movements in global oil prices and financial markets are largely being shaped by expectations that the conflict could affect key energy supply routes.
Crisis in the Middle East
“What we’re experiencing right now is what we often experience every time you have a crisis in the Middle East,” said De Castro. “You always have what I call the speculative effect — the expectation that the global supply of oil will be affected by the conflict.”
Oil markets have historically reacted sharply to geopolitical tensions in the Middle East. However, De Castro noted that the global oil supply infrastructure has shifted significantly over the past decade.
US emerging as world’s largest oil producer
He said the Middle East no longer dominates global production the same way it once did, with the United States emerging as the world’s largest oil producer following the expansion of shale production and advances in fracking technology.
“The United States is not actually dependent on Middle Eastern oil. It could tap oil from Canada. It could tap oil from its own strategic reserve,” De Castro explained.
Despite this shift, energy-importing economies remain vulnerable to price volatility triggered by geopolitical tensions. The Philippines, which relies heavily on imported fuel to power its transport and electricity sectors, is particularly sensitive to global oil price swings.
Reflects US-China geopolitical competition
De Castro said the current situation may also reflect broader geopolitical competition between Washington and Beijing, particularly in terms of energy security and access to strategic resources.
“What would happen, of course, will be the flow of oil in East Asia and more significantly to China,” he said, noting that China depends heavily on imported energy to build and maintain its strategic oil reserves.
According to De Castro, Washington’s moves against Iran could also be interpreted as part of a wider strategic calculation aimed at limiting China’s access to Iranian oil supplies.
A “calculated risk”
He described the situation as a “calculated risk,” suggesting that the developments may align with the broader strategic priorities of the current US administration.
“This calculated risk is most likely part of the Trump administration’s agenda,” he said.
For countries such as the Philippines, geopolitical tensions in major oil-producing regions often translate into immediate reactions in energy markets, even if supply disruptions have yet to materialize.
“What we’re seeing is largely psychological,” De Castro said, referring to how geopolitical uncertainty influences global commodity markets.
As tensions continue to evolve, oil-import-dependent economies like the Philippines will remain vulnerable to market volatility, with even speculative price movements potentially affecting domestic fuel costs and broader economic activity.