Some of the country’s most influential business groups warned that escalating tensions in the Middle East could drive up domestic inflation amid upward adjustments in oil prices due to supply and shipping disruptions.

As a net importer of oil, the Federation of Philippine Industries (FPI) said the country is bound to feel the pass-through of higher global crude prices, especially with disruptions in oil shipments.

“The Middle East crisis is not just a distant conflict—it is an inflationary shock that could affect Philippine households and industries if tensions persist,” FPI chairperson Elizabeth Lee said in a statement.

Over the weekend, the United States (US) and Israel mounted attacks on Iran, which killed its longtime supreme leader, Ayatollah Ali Khamenei. In retaliation, Iran has launched a wave of strikes across countries in the Middle East that host US military bases.

Based on reports, Iran has warned ships not to pass through the Strait of Hormuz, a critical maritime route where roughly 20 percent of global oil flows, as another countermeasure.

Lee said higher fuel prices, which also increase electricity generation costs, will directly impact sectors such as aviation, food processing, tourism, and manufacturing.

She noted that existing inventories of local oil companies may help cushion the immediate impact on consumers, but this remains only a short-term buffer.

“If the conflict escalates or becomes prolonged, inventories will be replenished at higher global prices—resulting in sustained upward pressure on domestic fuel costs,” said Lee.

For its part, the Philippine Chamber of Commerce and Industry (PCCI) said higher fuel prices, alongside disrupted supply chains and reduced remittance inflows, will have a compounding effect that may accelerate inflation.

PCCI said weaker purchasing power among Filipinos will directly impact businesses, especially micro, small, and medium enterprises (MSMEs) with limited financial buffers.

For the Philippine Exporters Confederation Inc. (Philexport), tensions in the Middle East are expected to impact exports to the region, which remains an important market for Philippine food products, construction materials, and services.

Philippine exports such as electronics, garments, processed food, and furniture may face increased shipping rates, insurance premiums, and longer transit times, according to Philexport.

“Past tensions in the region have already led to higher freight and security surcharges and could again constrain trade flows and tourism, further dampening demand in major export destinations,” the group said in a statement.

A major commodity under threat is urea fertilizer, which the local agriculture sector is highly dependent on, given that it is produced in Iran and nearby countries in the Middle East.

In a letter to President Ferdinand “Bongbong” Marcos Jr., the National Confederation of Irrigators Association Inc. (NCIA) said disruptions in shipments of raw materials would likely trigger a surge in fertilizer prices.

"Any disruption in gas supply or shipping routes in the region immediately translates into higher urea prices worldwide," said NCIA.

With these concerns, PCCI said the government should be proactive in stabilizing fuel prices while guarding firmly against “speculative practices” that exploit the crisis.

As a long-term measure, the business group said the government must explore alternative sources of fuel supply to reduce the country’s dependence on the Middle East.

“We likewise urge the Department of Energy (DOE) to accelerate the development of renewable energy and domestic energy alternatives as a long-term structural solution to our energy vulnerability,” it added.

Philexport, on the other hand, called on the government to adopt mitigating measures to address logistics bottlenecks and support exporters with trade facilitation.

“The organization likewise calls on exporters to review supply chains, hedge against cost volatility where possible, and explore alternative routes and markets,” the group said.