Advisory notes “inevitability of domestic price spikes” reflecting global market movements
(Eagle News) – Oil price hikes would most likely continue due to the ongoing Ukraine-Russia crisis, according to the Philippine Department of Energy.
The DOE issued an advisory over the weekend warning the public against the “impending increase in the price of petroleum products” that would take effect this week, particularly on Tuesday, April 26.
The ongoing Russia-Ukraine crisis translates to instability in world oil prices, possibly leading to increase in prices.
-April 26 oil price hike-
On Tuesday, April 26, gasoline prices are expected to increase by at least P3 per liter, and diesel prices by around P4 per liter. This is the 14th oil price hike this year compared to three mostly minimal price rollbacks.
“The DOE is closely monitoring global oil supply and price movements, in coordination with our downstream oil industry players. We are working to exhaust all measures that would help uphold consumer welfare during this challenging period,” Energy Secretary Alfonso Cusi said in a statement.
The DOE, however, assured Filipinos that there is sufficient oil supply in the country.
Still, it warned the public against “the inevitability of domestic price spikes, which continue to reflect upward global market movements.”
“It is really unfortunate that the impact of the Russia-Ukraine crisis is felt globally. This is why we would like to earnestly appeal to everyone to integrate energy efficiency and conservation into our daily lives to help manage costs,”
-Factors affecting oil price hike –
Based on a statement from the DOE-Oil Industry Management Bureau (DOE-OIMB), the following global oil market developments are responsible for the oil price increases:
• “Russia-Ukraine peace talks are on a stand-still, weakening any hope for a resolution to the conflict, and exacerbating concerns of a possible European Union (EU) embargo on Russian oil;
• Ongoing discussions on a potential Russian oil ban. While the EU has not imposed a ban on Russian oil imports, French Finance Minister Bruno Le Maire had recently mentioned that an EU-level embargo on Russian oil was possible;
• The warning from OPEC+ on the impossibility of replacing seven million barrels per day (bpd) of Russian oil and other liquid exports that would be lost in the event of sanctions or voluntary actions;
• No Iran deal and low OPEC spare capacity due to various financial and economic factors. Reports indicate that only a few producers could maintain capacity in reserve while raising production. These are Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq.
Iran, under US sanctions, has over one million bpd that could return to the market. However, Iran would only be able to tap into this capacity if the nuclear talks are successful.”
-Consequences on ban on Russian oil –
Last week, no less than US Treasury Secretary Janet Yellen warned that a European ban on Russian oil and gas imports could have unintended economic consequences that will cause more harm than good to global economies.
“Europe clearly needs to reduce its dependence on Russia with respect to energy. But we need to be careful when we think about a complete European ban on, say, oil imports,” Yellen said.
A European energy ban would raise global oil prices “and, counterintuitively, it could actually have very little negative impact on Russia, because although Russia might export less, its price it gets for its exports would go up.”
Referring to a proposed ban, Yellen said, “if we could figure out a way to do that without harming the entire globe through higher energy prices, that would be ideal.”
(Eagle News Service with a report from Agence France Presse)