New round of big-time oil price hikes next week

Published June 6, 2020, 12:00 AM

by manilabulletin_admin


By Myrna Velasco

Motorists will have to cope with a new round of big-time hikes in pump prices this coming week at the scale of P1.70 to P1.90 per liter for gasoline products; and P0.90 to P1.10 per liter for diesel products.

(Mark Balmores / MANILA BULLETIN)

For kerosene products that are essential not just for Filipino households but also as a base fuel for industries such as aviation, this is anticipated to go up by P0.80 to P0.95 per liter.

The calculated adjustments do not include yet the price increases that will be imposed based on the hiked 10-percent duty on imported crude and finished petroleum products.

Executive Order No. 113 issued by President Rodrigo last month stipulated that the higher import duty shall be enforced while the Bayanihan to Heal as One Act is still in effect; or for it to become a temporarily policy over a period of six months or until December this year.

But given that the COVID-19 response law of the country has already lapsed, policymakers from the Department of Energy and National Economic and Development Authority, have yet to signal if the import duty escalation would have to be terminated within an earlier timeframe.

Primarily, the expected increases in domestic petroleum prices this week follow increases in global oil prices during the past trading days.

International benchmark Brent crude returned to upswing reaching a level of US$42 per barrel; while Dubai crude, which is the benchmark for Asian markets, leveled at US$39 per barrel.

The rally in prices came followed the much-anticipated deal between the Organization of the Petroleum Exporting Countries (OPEC) and its ally-producers on prospective extension of the 9.7 million barrels per day production cuts. A meeting at which the deal is expected to be finalized is scheduled this weekend.

Previously, a road block to the output cutback deal had been the perceived “weak compliance” of Iraq, but markets reacted favorably when that oil-producer country announced that it would strive for stricter compliance.

Compared to the time of the coronavirus-linked lockdowns when international prices had fallen to the level of US$18 to US$20 per barrel, oil markets are now manifestly on recovery mode as movement restrictions are already easing in most parts of the world.

According to earlier market forecasts, prices may circle back to the level of US$50 per barrel toward the end of the year, but as it appears from current developments, this could happen sooner than anticipated.