As global oil prices inched higher to $73 per barrel at end of trading week, Filipino consumers will be squeezed further next week with domestic pump prices expected for heftier increases.
Based on the calculation by oil companies, gasoline prices could climb P0.70 to P0.80 per liter; while diesel and kerosene prices by P0.65 to P0.75 per liter.
Since the start of the year, a monitoring report of the Department of Energy (DOE) showed that oil prices already posted net increase of P10.00 per liter for gasoline, P8.55 per liter for diesel, and P7.00 per liter for kerosene.
Adding to the string of bad news on the price of oil commodities is the rising value of the US dollar, which could further weigh down the spending power of countries, like the Philippines, that have been heavily importing their oil requirements.
Following last week’s decision of the Federal Reserve on raising headline inflation expectation, the US dollar had climbed to P48.43 as of Friday, June 18, entailing then that it becomes more expensive for the Philippines to buy its oil needs in the coming weeks and months.
In the international market, industry forecasts that oil prices may surge higher than US$70 per barrel as many countries expect hawkish economic recovery post-pandemic.
And these economic turnarounds, according to experts, are happening against the backdrop of insufficient capital outlay and under-investments in new oil drillings resulting from last year’s strike of the Covid-19 global health crisis.
Based on the projections of the International Energy Agency (IEA), there will be overall tightening of supply as global demand is seen escalating by 3.1 million barrels per day next year.
Essentially, the Paris-based global energy think tank noted that oil demand is now pacing on its return to pre-pandemic level as ‘gap’ between supply and demand may start manifesting by the second half of this year.
On the supply side, producers outside of the outside of the enclaves of the Organization of the Petroleum Exporting Countries (OPEC) and its alliance – and this shall be led by Brazil and Norway are expected to pump up additional output The OPEC+ alliance will meet again on July 1 to evaluate market conditions and assess if there will be a need to send more oil into markets.
In the regional market, prospects remained ‘frail’ – especially in Southeast Asian markets - because of the continuing problem over rising Covid-19 infections.
Asia-wide, there has been tightening of supply because of the shutdown of one major refinery in India and delayed commodity shipments from other global producers.