Local fuel prices may drop next week as global oil markets eased following the start of a two-week ceasefire between the United States and Iran, signaling a reversal after weeks of conflict-driven spikes.
Industry estimates based on the first three days of trading showed diesel prices may fall by P2.50 to P3.50 per liter, while gasoline may drop by P1 per liter.
An industry source said the truce tempered supply concerns, offering motorists some relief after consecutive increases. Oil firms are expected to announce their official adjustments on Monday.
If projections hold, pump prices could settle at P123.95 to P169.40 per liter for diesel and P85.55 to P118.90 per liter for gasoline, based on prevailing retail levels from 7 April onwards.
The outlook follows a sharp global turnaround, with oil prices falling about 15 percent to around $95 per barrel after the reported truce, raising hopes for the reopening of the Strait of Hormuz, a key shipping route.
Global markets reacted swiftly, with Wall Street’s main indexes rising more than two percent and European and Asian markets posting gains as investors returned to risk assets. The US dollar also weakened against major currencies.
But officials, analysts, and observers cautioned that any relief may be short-lived or slow to reach consumers.
Former Energy Secretary Rene Almendras said pump price reductions would likely lag behind global declines, as domestic pricing is based on averaged costs.
“Even if prices are going down, it will not immediately translate to lower pump prices,” Almendras said, citing continued volatility in global benchmarks.
He added that while the Strait of Hormuz is reopening, supply chains remain strained.
“Even with Hormuz open, even if we declutch the ships that are stuck, you’re still talking refinery capacity and storage. It will take 30, 60, maybe even 90 days for the logistical flow to normalize,” he said.
Skeptical
Energy Secretary Sharon S. Garin echoed the cautious outlook, warning that supply disruptions in the Middle East could have lasting effects.
“The war has been going on for over four weeks. Even if the Strait of Hormuz is cleared, there is no guarantee that the Middle East supply will return to pre-war levels. Reconstruction may take months, even years,” Garin said.
She noted that fuel prices surged more than 100 percent in a month due to the disruptions, adding that any rollback would likely be slower as supply routes stabilize.
Adding to the skepticism, Renato de Castro, a professor at the International Studies Department of De La Salle University, said oil firms tend to increase prices faster than they cut them, noting that profit remains the primary driver in business.
“Have you heard about the rocket-feather effect?” de Castro asked, referring to a term economists use to describe fuel price movements. “When oil prices rise, they shoot up like a rocket. But when prices fall, they drop slowly, like a feather,” he said.
Speaking on DAILY TRIBUNE’s digital program Usapang OFW, De Castro said companies are naturally inclined to maximize gains, which can delay the transmission of global price declines to local pump prices.
“They are businessmen; they’re not there to serve us. They’re not doing humanitarian work — they’re there to make a profit. I don’t mean to sound sarcastic, but that’s the law of the market,” he said.
Other analysts also warned the rally may not last, noting that markets are reacting not to lasting peace but to a temporary window for negotiation.
“In reality, the markets are not pricing in peace but in a window for negotiation,” John Plassard said. “In two weeks, either this will lead to a lasting agreement, or it will only postpone and amplify the energy shock.”
Fresh tensions, including Israeli bombardments in Lebanon, highlighted how fragile the ceasefire remains, with markets remaining highly sensitive to developments.
“Every development in this war has been pretty much unpredictable — we remain in a headline-driven market,” Angelo Kourkafas said.
Oil prices and equities also remain far from pre-conflict levels, with damaged infrastructure and supply disruptions continuing to weigh on recovery.
“I don’t think we’re going to quickly go back to the levels we were at before the war,” Kathleen Brooks said.
Bottlenecks
Shipping bottlenecks persist, with hundreds of vessels still stranded despite the partial reopening of the Strait of Hormuz.
The International Air Transport Association warned that jet fuel supply and prices could take months to stabilize.
“Should talks falter or activity through the strait remain subdued, oil prices and the dollar could reverse course fairly quickly,” Matthew Ryan said.
Almendras also cautioned against calls for price regulation, stressing that the global oil market operates under a deregulated system.
“You cannot regulate a deregulated market. Even the international market is not regulated. If you regulate it, it will cost us,” he said, noting that subsidies in oil-producing countries would require significant public funds if applied locally.
Enough supply
Despite the volatility, the Department of Energy said the local fuel supply remains sufficient, with total inventory at 75.05 million liters as of Tuesday — enough to cover demand for more than 50 days.
Gasoline stocks stand at 23.33-million liters, good for nearly 58 days, while diesel supply is at 32.52-million liters, sufficient for about 47 days. Kerosene inventory, at 142,140 liters, can last up to 106 days.
Other fuels remain stable, with jet fuel and fuel oil inventories at 6.32-million liters and 2.47-million liters, covering 66 and 52 days, respectively, while liquefied petroleum gas stands at 10.27-million liters, enough for 33 days.