The Manila Times
HAVING once more soared beyond $110 per barrel on Thursday, could oil prices reach new records beyond $150 as some analysts believe? President Donald Trump’s latest belligerent tone over the Middle East war has reignited concerns about persistently high crude costs and the limited measures available to tackle the fallout. Since the start of the US-Israeli conflict with Iran on Feb. 28, benchmark oil prices have soared more than 50 percent largely owing to the Strait of Hormuz — through which normally one-fifth of the world’s crude passes — shutting to most tankers. French bank Societe Generale said $150 is a “credible” outcome on a prolonged war, while most analysts estimate crude hitting $130-$140. Australian bank Macquarie forecast $200 crude should the war still occur in June. And this does not take into account closure of the Strait of Hormuz combined with an attack on Kharg Island — through which the bulk of Iran’s crude production travels — or disruption to another key trading route, the Strait of Bab el-Mandeb. International benchmark Brent North Sea crude and the main US contract, West Texas Intermediate, each soared to record highs above $147 in the wake of the 2008 global financial crisis before collapsing during the Covid pandemic. At around $110, consumers are already facing heavy financial pain, as prices of gasoline and diesel soar around the world. In an unprecedented decision in response to the Mideast war, the 32 nations belonging to the International Energy Agency (IEA) pledged to unlock 426 million barrels, equivalent to more than one-third of their combined reserves. The United States, itself a major oil producer, is to release 172 million barrels, or 40 percent of its strategic reserves. These emergency releases “are not sufficient,” UBS commodities analyst Giovanni Staunovo told Agence France-Presse (AFP), noting that the maximum pace of release is around 3 million barrels per day (mpd) compared with 15 mpd failing to reach the market because of the war. The conflict has already triggered a crisis more severe than the oil shocks of the 1970s and the one that followed Russia’s invasion of Ukraine in 2022, IEA head Fatih Birol said on a podcast published on Wednesday, adding that “April will be much worse than March.” The agency has identified about 40 key energy infrastructures damaged since the start of the Mideast war, which will each take time to repair. For countries dependent on oil and gas transiting through the Strait of Hormuz — in particular those spread across Asia and Europe — the situation appeared bleak. Three-quarters of the world’s population lives in countries dependent on fossil fuels, according to energy think tank Ember. Governments have less budgetary leeway to help businesses and households, with public debt potentially reaching 100 percent of gross domestic product by 2029, a high since the end of the Second World War, according to recent projections by the International Monetary Fund. Meanwhile, among political leaders and economic groups, many want the phasing out of fossil fuels to be accelerated. A recent University of Oxford study claimed that a fully decarbonized energy system in the United Kingdom would save an average household 441 pounds ($509) in annual bills compared with up to 82 pounds if all North Sea oil and gas wells were exploited. In the short term, calls for energy-use moderation are multiplying, such as the European Commission’s request to member states to reduce their oil demand, or Bangladesh’s call for its civil servants to turn off lights and lower air-conditioning. Several countries, including Malaysia and Sri Lanka, are encouraging people to work from home if they are able to do so. “The reality is, the economic shocks caused by this war will be with us for months,” Australia’s Prime Minister Anthony Albanese warned on Wednesday. In the Philippines, diesel and gasoline prices are expected to spike again next week, as the war in the Middle East drags on. A source in the local oil industry said diesel prices will increase by around P17 to P19 per liter, and gasoline by P3 to P5 per liter. The estimates are based on the four-day trading of Mean of Platts Singapore, the pricing basis of refined goods in Southeast Asia. The source said recent talks by the Philippine government with Iran to allow Philippine-bound oil shipments safe passage through the Strait of Hormuz could help bring fuel prices down. “Any serious talks with Iran could de-escalate the tensions and bring some relief to prices. However, until the Strait of Hormuz is reopened, supply will continue to remain tight and prices supported,” the source said. This week, diesel rose by P4.50 to P12.90 per liter, and gasoline by as much as P2.90 per liter. As of Maundy Thursday, 375 out of 14,519 gas stations in Metro Manila closed down after delivery of petroleum products was suspended because of the Holy Week break. On Friday, the Philippine National Police (PNP) said it will continue to be vigilant against profiteering and hoarding of oil products. Nine profiteering and hoarding cases have so far been filed by the PNP against fuel dealers. “Amid strict monitoring of [overall security] situation this Holy Week, we continue to coordinate with the DOE (Department of Energy), Municipal Price Coordinating Council and other agencies to ensure the smooth supply [of petroleum products] and avoid any interruptions with the public,” PNP chief Gen. Jose Melencio Nartatez Jr. said in a statement. He reminded business owners to “comply with the law and not to hoard or overprice fuel. Breaking the law has a punishment.” Nartatez also appealed to the public to report any illegal or unethical practices related to fuel supply and pricing. Also on Friday, Malacañang dismissed as “fake news” claims that there would be an energy lockdown starting April 20. Palace Press Officer Claire Castro issued the statement in response to a social media post about an energy lockdown. “Fake news. Please spread, this is fake news,” Castro said in a Viber message. The advisory, which even bears the logo of the DOE, urged the public to prepare power banks, solar equipment, candles, lamps, food and other essentials in anticipation of the energy lockdown.
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