Oil price hikes seen continuing in H1

MANILA, Philippines — Consumers should brace themselves for further spikes in fuel costs throughout the first half of the year, as global oil prices are expected to continue their uptrend.

Sources closely monitoring oil prices told The STAR that expectations are for prices to follow a generally increasing trend through the second quarter.

The forecast uptrend is due to various factors, such as sentiments resulting from conflicts in the Middle East, as well as diversions of oil supply from the Red Sea to longer haul around South Africa, causing higher freight rates, and war risk insurance for Red Sea transits.

Ongoing supply restraint from OPEC+ would also likely remain this year.

Sustained increase in oil prices does not bode well for consumers, as weekly domestic pump price adjustments reflect movement in the international oil market.

The Philippines is purely dependent on imported fuel, both crude and finished products.

“It’s the volatilities that we have to deal with. Let’s hope that the geopolitical tensions are reduced. External factors are really the main causes,” Energy Secretary Raphael Lotilla told The STAR.

Under the Downstream Oil Industry Deregulation Act of 1998, the Department of Energy (DOE) is only authorized to monitor both the international and domestic price movements of petroleum products, as well as the compliance of businesses with national standards.

“We’re trying to address some of the infrastructure needs as far as power is concerned. As for fuel, of course, it will have to take a longer-term horizon. It includes things like, over the longer term, what will really be the ultimate direction for petroleum fuels,” Lotilla said.

“Although it’s long term, it will determine also what kind of investments will be coming into the sector. What we have seen is, the underinvestment globally in petroleum fuels has led to the shortage that we have right now,” he said.

Lotilla said there is currently a lot of uncertainties, that even the country’s energy plan has to have different scenarios because of the relatively unpredictable situation.

“It’s so difficult unlike before, although prices were cyclical, they would remain stable over a five- to 10-year