June 16 ------ Motorists are in for another financially punishing week as gasoline products go up by ₱1.25 per liter, and diesel by ₱1.10 per liter this week. Kerosene will increase by ₱0.75 per liter based on the pricing advisories sent by the oil companies to the media. As of press time, the oil firms that already advised fuel price increase were Seaoil Philippines, Cleanfuel, PetroGazz and Total Philippines.
The rest of the industry players are anticipated to follow. It is also this week that some of the oil companies will be enforcing additional increase from ₱1.30 to ₱1.60 per liter across products because of the 10 percent import duty enforced by the government to raise additional cash for the State’s response to the coronavirus pandemic. A number of industry players had swamped levels of inventories which were used up recently, hence, it is only this time that they are adding the cost-impact of the higher import duty of crude and finished petroleum products.
The oil firms said the estimated adjustments were based on the sway of the Mean of Platts Singapore (MOPS), which is the pricing reference of Philippine oil industry players in their weekly cost movements. International benchmark Brent crude softened to the level of US$38 per barrel as of Friday (June 12) trading compared to an upswing of US$42 per barrel the other week. Nevertheless, Dubai crude, which is the pricing reference for Asian oil markets, surged to US$41.50 per barrel versus the previous week’s tamer US$39 per barrel.
Global prices are still anticipated to be propped for upticks in the coming weeks following the outcome of the June 6, 2020 meeting between the Organization of the Petroleum Exporting Countries (OPEC) and its ally-producers led by Russia wherein they extended production cuts by another month. Their decision entails that output will have to be continually trimmed by 9.7 million barrels day, which is equivalent to 10 percent of global oil production on normal conditions.
That was a follow-through to the April agreement that the international oil producers had come up with to lift prices when it collapsed below US$20 per barrel because of the coronavirus-linked lockdowns of many countries that restricted people’s movement and practically stymied economic activities. In the new deal of the OPEC+ alliance, it was agreed that producers that won’t be able to conform to the enforced cuts shall agree to the option of adjusting their productions by July, August and September this year.
OPEC noted in a statement that “in order to observe the fair, timely and equitable implementation (of the agreement), the Joint Ministerial Monitoring Committee was requested to closely review the general energy market conditions and related factors, oil production levels and conformity levels with the DoC (declaration of cooperation).”
For the Philippine market, the impact of rising oil prices comes as a double-edged sword – that while it will help shore up revenue stream for the oil companies, it will conversely burden consumers. The country’s oil industry players generally reported sheared bottom lines in the first three months of the year and this is seen sustained in the second quarter; but with the gradual reopening of the economy coupled with escalating prices, it is expected that they will recover on financial performance through the remaining months of the year.