By Chloe Mari A. Hufana and Sheldeen Joy Talavera, Reporters
PHILIPPINE President Ferdinand R. Marcos, Jr. on Wednesday stated that the economic repercussions from the conflict between Israel and Iran would be “manageable,” referencing stabilizing global oil prices after a ceasefire that alleviated concerns about the closure of the Strait of Hormuz, an essential shipping route for the global economy.
“Up to now, there is no substantial impact on the economy,” he remarked to reporters in Capas, Tarlac in a blend of English and Filipino, according to a transcript provided by his office.
“We analyzed the situation and evaluated how it might develop. We believe that the impact on the economy should be manageable. Naturally, there could still be some influence if oil prices increase,” he continued.
The President convened with his economic team on Tuesday to evaluate the possible consequences of the Middle Eastern conflict, particularly on energy prices. Economy, Planning, and Development Secretary Arsenio M. Balisacan indicated that the war’s effect was minor and not alarming.
Brent crude momentarily surged to $79 per barrel amidst geopolitical anxieties but decreased to around $69 after US President Donald J. Trump declared a ceasefire, easing worries about potential disruptions to the crucial Strait of Hormuz shipping route, as reported by Reuters.
Brent had settled at its lowest since June 10 and since June 5 for West Texas Intermediate before Israel executed a surprise strike on significant Iranian military and nuclear installations on June 13.
An oil price reduction is anticipated next week based on a two-day trading session in the global market, according to Jetti Petroleum, Inc. President Leo P. Bellas in a Viber message to reporters.
“Essentially, refined fuel costs followed the trends of crude oil,” he noted. “The decrease in prices commenced with the reduction of war risk premiums on crude oil after the conflict eased.”
Mr. Bellas indicated that global oil prices “further declined” following the ceasefire agreement, diminishing the risk of supply disruptions in the Middle East.
Based on two-day trading from the Mean of Platts Singapore (MOPS), a standard for refined oil products, diesel prices are projected to drop by P0.80 to P1.10 per liter, while gasoline prices may rise by P0.10 or decrease by P0.20 per liter.
Mr. Bellas mentioned that the initial indications regarding domestic price movements could still vary, depending on MOPS trading in the next three days.
“Although tensions have eased, the situation in the Middle East remains delicate yet stable at this point,” he explained. “Crude oil prices could fluctuate within a range in the coming days.”
Mr. Bellas stated that refined fuel prices in Asia would be influenced by “supply-demand fundamentals,” with demand expected to rise during the summer season and supply anticipated to gradually increase with the return of refineries post-turnaround.
In a release, the Department of Energy announced it had conducted on-site monitoring at fuel retail outlets in Taguig City to ensure that consumers receive petroleum products in appropriate quantity and quality.
It also sought to guarantee that fuel retailers adhered to the staggered price increases.
The Philippines, a net importer of oil, is extremely sensitive to sudden changes in global oil prices.
The government is keeping an eye out for indications of price gouging as many have raised prices despite a decline in global rates.
Mr. Marcos mentioned that with oil prices stabilizing, the administration sees no immediate necessity to introduce further fuel subsidies for sectors such as transport, fisheries, and agriculture.
He added that assistance in the form of subsidies would only be contemplated if fuel prices surged again.
“The price of oil has not escalated,” he stated in response to transport groups’ request for increased support. “It rose for one day, and then it went back down.”
While assistance programs remain in effect, the government remarked that additional aid would rely on actual price movements and not on fleeting fluctuations.
‘BIGGER DEAL’
Oil companies in the Philippines are required to maintain a minimum 30-day fuel inventory to stabilize local supply. If global crude prices exceed the $80 per barrel mark, fuel subsidies for public transport drivers and fisherfolk will be automatically triggered.
Local fuel retailers executed the first phase of the oil price increase on Tuesday, with some implementing the second phase either on Thursday or Friday.
The total price hike for the week is P3.50 per liter for gasoline, P5.20 for diesel, and P4.80 for kerosene.
The Energy department and economic managers are expected to remain vigilant regarding global oil market changes for any signals of renewed volatility.
Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., mentioned that the Israel-Iran war is more significant than past conflicts involving oil-producing nations, such as the Russia-Ukraine war.
“The Middle East is the primary source of the [Philippines’] oil,” he noted in a Viber chat. “While any war involving oil-exporting nations will lead to global supply interruptions, the crisis in the Middle East has more direct repercussions on our oil supply.”
He asserted that the ceasefire facilitated by US President Donald J. Trump is “excellent news” for the economy and was the main factor behind Mr. Marcos’ assessment that the conflict would minimally affect the Philippine economy.
“In the long term, constant geopolitical instability necessitates the diversification of trade partners and supply chains, especially for essential goods like oil,” he added.
Israel initiated an unexpected strike on Iran earlier this month, targeting critical nuclear and ballistic missile facilities along with high-ranking military figures. Washington joined the campaign on Sunday, targeting vital nuclear sites in Iran.
Jose Enrique “Sonny” A. Africa, executive director at the think tank IBON Foundation, described the government’s assessment as “misleading,” particularly with the growing uncertainty and US involvement in the war.
“Such dismissive attitudes highlight the lack of strategic thinking regarding the economy’s fundamental overreliance on imported energy,” he communicated via Viber. “The absence of long-term policy actions is why these and similar vulnerabilities will persist.”
