Diesel prices seen plunging by up to P7.50/L

Motorists could claw back most of this week’s massive diesel price hike in one go, with pump prices expected to drop by up to P7.50 per liter next week as global supply jitters ease.

Industry estimates based on the first four trading days of Mean of Platts Singapore and foreign exchange averages point to a P7 to P7.50 per liter rollback for diesel and a smaller P0.50 to P1 cut for gasoline.

Substantial relief

For diesel users, the relief could be substantial. The projected rollback would wipe out most of this week’s P8.82-per-liter spike, potentially pulling regular diesel prices in Metro Manila back to around P89.03 to P103.82 per liter.

Gasoline users, however, may have to wait longer for meaningful relief. The projected cut would erase only a fraction of this week’s P4.88-per-liter increase, leaving gasoline at roughly P78.86 to P111.18 per liter, depending on the octane grade and station.

Jetti Petroleum Inc. president Leo Bellas said Friday the sharp reversal in diesel was driven partly by easing fears over Middle East supply as oil prices retreated during the week.

Diplomacy hopes in the Iran war

“Oil prices fell on diplomacy hopes in the Iran war during this week’s UN General Assembly meeting, and recovering shipments from Saudi Arabia eased supply concerns.

The possible resumption of flows through the East-West pipeline, prompted by an increase in shipping activity in Yanbu in the Red Sea, has also pressured prices,” Bellas said.

Oil prices rebounded after Iran’s president told the UN General Assembly that Tehran would never surrender to US pressure. Iran has maintained that it remains open to diplomacy to end the US-Iran war, but Bellas said slow progress in the talks kept a floor under prices.

A recent Houthi missile attack on Saudi Arabia added another layer of uncertainty, reviving fears that supplies could again be disrupted.

Tug-of-war evident in diesel

The tug-of-war was particularly evident in diesel.

Bellas noted Asian diesel prices initially traded lower as Middle Eastern crude supplies improved, although supply constraints remained. Diesel then rebounded sharply following reports that the United States was considering restricting its diesel exports.

Asian gasoline prices also tracked crude lower but remained supported by firm regional demand and the possibility of reduced Chinese exports.