MANILA – Domestic oil prices will likely increase by as much as PHP2.25 per liter next week due to an uptick in prices in the international market.
Citing price developments as of Thursday, Leo Bellas, Jetti Energy president, in a message to journalists Friday, said diesel prices are expected to jump between PHP1.75 and PHP2.25 per liter and gasoline between PHP1 and PHP1.50 per liter.
Bellas explained that "oil prices climbed due to a rebuild in the geopolitical premium as prospects for a diplomatic solution to the US-Iran conflict and normalization of navigation through the Strait of Hormuz have dimmed.”
“With the expiration of the mid-June US-Iran MOU (memorandum of understanding) and both sides expressing intentions to take a harder line, markets are pricing in the possibility of a prolonged crisis,” he said.
Bellas said additional factors for the higher oil prices include the “risks to Russian supply following Black Sea loading disruptions due to concerns over the reliability of replacement sour crude to offset the reduced Middle East availability.”
“Sustaining the strength of diesel is the still-fragile physical balances, despite improving replacement supply from continued acceleration of outflows from China, as concerns remain over low inventories, reduced Middle Eastern availability through the Strait of Hormuz, and constrained exports from Russia,” he said.
Bellas said the continued military actions in the Middle East are the primary factor for movements in oil prices “due to curtailment of crude feedstock exiting the Strait of Hormuz and disruption of flows from the alternate Red Sea route, although further upside is capped by higher regional supplies from rising India and China outflows.”
“Continuing attacks on Russia’s refining sector are further keeping global product supplies tight,” he added. (PNA)
