Fuel pressure returns to pump prices

From AB Capital's The Opening Bell: Three Moves

Event

The Department of Energy expects diesel prices to rise by P2.62-4.62/l and kerosene by P2.22-4.22/l, while gasoline could move within plus or minus P1.0/l. Starting next week, the Department of Energy plans to issue specific adjustments instead of ranges for tighter monitoring.

View

In our view, the shift back to sharper pump-price guidance reflects renewed oil volatility and consumer-protection concerns. The Philippines remains exposed because it is a net petroleum importer, while Hormuz risks can quickly feed into fuel, transport, utilities, and inflation expectations.

Catalyst

Key sensitivities are Strait of Hormuz navigation, US-Iran escalation, Brent levels, and local inventory cover, which improved to 47.84 days as of July 10. If inventories remain comfortable, pass-through may be manageable. If crude rises further, inflation relief could fade quickly.

Action

We think this weakens the clean macro relief trade and keeps Bangko Sentral ng Pilipinas (BSP) policy risk alive. Favor companies with pricing power and pass-through, including utilities and selected defensives. Stay cautious on transport-sensitive consumers, autos, property, REITs, and high-duration names until fuel prices stabilize.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.