Oil prices on another round of price hikes next week

Published June 12, 2021, 11:40 AM

by Myrna M. Velasco

Filipino consumers will need to brace for another round of pump price hikes next week as global oil prices continue to rise,

Initial estimates by industry players showed that gasoline prices could increase by P0.45 to P0.55 per liter; while diesel y P0.35 to P0.45 per liter.

Kerosene product, which is a base for aviation fuel, will similarly be increased by P0.30 to P0.40 per liter, and that is driven by the wider resumption of travel in most parts of the world that are already getting headway on their vaccination programs.

In last week’s trading, international benchmark Brent crude climbed past US$72 per barrel; while Dubai crude which is a pricing reference for Asian markets, had gone higher than US$70 per barrel.

On oil price adjustments since the start of the year, the Department of Energy (DOE) calculated that there was still a net increase of P9.50 per liter for gasoline; P8.15 per liter for diesel; and P6.70 per liter for kerosene.

According to industry experts, prices logged “modest gains” as of Friday trading; but that was after a drop in earlier days of the week because of the United States’ move to lift sanctions on some Iranian officials, including directors of the National Iranian Oil Company.

And as demand is ramped up in countries that are now springing back faster on their economies, the Organization of the Petroleum Exporting Countries (OPEC) and its ally-producers have indicated readiness to relax output limits, hence, that is giving assurance that more oil will be pumped into markets as needed.

The projection of the Paris-based International Energy Agency (IEA) is for oil demand to “rebound past pre-pandemic levels by the end of 2022.”

The global energy think tank noted that after a demand decline of 8.6 million barrels per day at last year’s height of the Covid-19 pandemic, it will bounce back by 5.4 million barrels per day this year; and will escalate further by another 3.1 million m/d by 2022.

The IEA thus noted that the OPEC+ alliance will need to “open the taps” to bolster production which could then guarantee that world economies will be well-supplied with oil commodities post-pandemic.