Brace for hefty oil price hike
Published Sep 18, 2019 12:00 am
By Myrna Velasco
Filipino consumers may face hefty increases in oil prices next week in the wake of the two-day surge in global oil prices following the drone assault on the facilities of major global oil producer Saudi Aramco.
(MARK BALMORES / MANILA BULLETIN FILE PHOTO)
While there are already signs of softening, the price spikes in the first two days after the Saudi Arabia attack may impact on the local oil prices.
On the first two days of trading in the world market, Dubai crude – the benchmark for Asian refiners – increased by US$6.00 to US$9.00 per barrel. Based on the calculation of the local oil companies, this could redound to more than P2 per liter of increases at the pumps.
As a rule of thumb, every US dollar increase in world oil prices could result in up to P0.30 per liter increase in retail cost of products at the pumps, hence, the two-day hikes could result in increases of P1.80 to P2.70 per liter.
From US$58 per barrel level last Friday, Dubai crude climbed to more than US$63.86 per barrel on Monday. It surged even higher to US$67.55 per barrel at the close of trading on Tuesday.
Nevertheless on Wednesday (September 18), Dubai and others in the crude basket had been showing some signs of softening – although industry players have been projecting that the weekend events in the Middle East would still result in relatively massive adjustments next week.
When asked on the anticipated price spikes, the Department of Energy (DOE) indicated that “it cannot give an early assessment yet and it will need to wait until the end of Friday trading before it could apprise consumers of the anticipated price increases.”
On Tuesday evening in Saudi Arabia, the chief executive officer of Saudi Aramco Amin Nasser announced that its production had already been back to pre-attack levels. This allayed some earlier fears and wild speculations across markets.
The oil kingdom-producer noted that its production loss had been at the level of 5 percent of world oil supply, but it had promised “quick recovery” from the drone strike-induced incident last (September 14).
Notably, the attack triggered panic all over the world – not sparing a heavy oil import-dependent country like the Philippines, with some even raising prospects of supply disruption.
But as early as Monday, the two biggest oil companies in the country – Petron Corporation and Pilipinas Shell Petroleum Corporation – assured they have sufficient supply and said the impact of the Saudi oil attack could just be a “temporary jolt” to the industry.
The common assessment though is that it will raise prices by a higher magnitude by next Tuesday – compared to the swings in prices that domestic consumers had experienced in the past weeks.
(MARK BALMORES / MANILA BULLETIN FILE PHOTO)
While there are already signs of softening, the price spikes in the first two days after the Saudi Arabia attack may impact on the local oil prices.
On the first two days of trading in the world market, Dubai crude – the benchmark for Asian refiners – increased by US$6.00 to US$9.00 per barrel. Based on the calculation of the local oil companies, this could redound to more than P2 per liter of increases at the pumps.
As a rule of thumb, every US dollar increase in world oil prices could result in up to P0.30 per liter increase in retail cost of products at the pumps, hence, the two-day hikes could result in increases of P1.80 to P2.70 per liter.
From US$58 per barrel level last Friday, Dubai crude climbed to more than US$63.86 per barrel on Monday. It surged even higher to US$67.55 per barrel at the close of trading on Tuesday.
Nevertheless on Wednesday (September 18), Dubai and others in the crude basket had been showing some signs of softening – although industry players have been projecting that the weekend events in the Middle East would still result in relatively massive adjustments next week.
When asked on the anticipated price spikes, the Department of Energy (DOE) indicated that “it cannot give an early assessment yet and it will need to wait until the end of Friday trading before it could apprise consumers of the anticipated price increases.”
On Tuesday evening in Saudi Arabia, the chief executive officer of Saudi Aramco Amin Nasser announced that its production had already been back to pre-attack levels. This allayed some earlier fears and wild speculations across markets.
The oil kingdom-producer noted that its production loss had been at the level of 5 percent of world oil supply, but it had promised “quick recovery” from the drone strike-induced incident last (September 14).
Notably, the attack triggered panic all over the world – not sparing a heavy oil import-dependent country like the Philippines, with some even raising prospects of supply disruption.
But as early as Monday, the two biggest oil companies in the country – Petron Corporation and Pilipinas Shell Petroleum Corporation – assured they have sufficient supply and said the impact of the Saudi oil attack could just be a “temporary jolt” to the industry.
The common assessment though is that it will raise prices by a higher magnitude by next Tuesday – compared to the swings in prices that domestic consumers had experienced in the past weeks.