Filipino commuters and drivers may have to wait longer before petroleum prices see a decline, even if Tehran has allowed Philippine-bound vessels carrying oil products to pass through the Strait of Hormuz.
Although Iran has guaranteed safe passage for oil heading towards the Philippines, petroleum industry sources on Saturday say that prices at the pump lowering anytime soon from its rise on Feb. 28 still remains “highly unlikely.”
According to sources, the pricing of oil products is more complex than just Iran’s promise of safe passage for Filipino oil tankers, whether owned by the country or are flagged as Filipino.
Furthermore, even if oil supplies were a direct factor in the reduction of fuel prices, lower prices would not be felt by Filipinos anytime soon as it would take around two weeks just for any shipment to reach the country and its only oil refinery, owned by Petron Corporation.
The conflict in the Middle East has resulted in the swelling of petroleum prices worldwide, with other countries beginning to shut down their oil export operations in a move to conserve their remaining supply.
With the war five weeks in, Brent Crude, the world benchmark for oil—has risen by 51 percent to $109 per barrel, from the $72 per barrel price previously recorded before the first bombardments in Iran.
Manila was able to secure Tehran’s promise of safe passage after a phone call between Foreign Secretary Ma. Theresa Lazaro and Iranian Foreign Minister Seyed Abbas Araghchi on Apr. 2, with Lazaro remarking the call as “very productive.”
“During the call, the Iranian Foreign Minister assured the secretary that Iran will allow the safe, unhindered, and expeditious passage through the Strait of Hormuz of Philippine-flagged vessels, energy sources, and all Filipino seafarers,” the Department of Foreign Affairs (DFA) said.
Currently controlled by Iran, the Strait of Hormuz is a vital oil transport corridor, with around one-fifth of the world’s crude oil supply running through it every day.
Based on data from the Department of Energy (DoE), the Philippines heavily relies on foreign oil supply, with 98 percent of the country’s oil imports coming from the Middle East, while about 97 percent of imports of petroleum products such as diesel, gasoline, and kerosene originate from Asian countries who also process Middle Eastern oil.
Since the beginning of the conflict, Filipinos have witnessed double-digit price per liter increases, especially on diesel, which is the main fuel used for passenger and cargo transportation vehicles.
However, the government lacks the ability to dictate or cap fuel prices, as a result of the Oil Deregulation Law, with the excise on fuel, which is P10 per liter for gasoline and P6 per liter of diesel still yet to be cancelled.
Moreover, the earliest that the excise can be lifted is on April 12 or 13 under Republic Act No. 12316, which gives the President special powers to lift or suspend the tax.
Written by Francis Santos, Insight PH
Francis Santos, Insight PH is a dedicated campus journalist and contributor. Their insightful writing sparks meaningful conversations and keeps the community informed.
