Oil prices higher, Saudi drone attack not yet factored

MANILA, Philippines — Pump prices are set to increase today on expectations of higher global demand for oil with the easing of the US-China trade war.

The impact of the drone attacks on a major oil facility in Saudi Arabia is not yet factored in the latest price hikes, energy officials said.

In separate advisories, oil firms announced gasoline prices would be raised by P1.35 per liter, diesel prices by P0.85 per liter and kerosene by P1.00 per liter. Chevron Philippines (Caltex) said its price change would start after midnight.

Price adjustments of Petro Gazz, Phoenix Petroleum, Pilipinas Shell Petroleum Corp., PTT Philippines and Seaoil Philippines take effect at 6 a.m.

“(Today’s) price increase is not the result of drone attack to two of Saudi’s oil facilities. Rather, it is because of the US-China Trade War that seems to be resolved and the market reacted that it will result in increase in oil demand. Likewise, US inventory declined,” Rodela Romero, assistant director of the Department of Energy (DOE) Oil Industry Management Bureau (OIMB), said in a text message.

The Saturday drone attacks on two major oil facilities of state-run Saudi Aramco in Saudi Arabia are expected to cut the kingdom’s output by 5.7 million barrels per day (bpd) or more than five percent of the global oil supply, a Reuters report said.

The DOE convened an emergency meeting last Sunday of the government’s energy offices to discuss the possible impact on the Philippines of the latest development in the Middle East.

At the meeting with the DOE were heads and representatives of the Electric Power Industry Management Bureau, Oil Industry Management Bureau, National Electrification Administration (NEA), National Power Corp. (Napocor),  Philippine National Oil Co. and the PNOC Exploration Corp. 

“The emergency meeting held (Sunday) by the energy family is to ensure that we are prepared to face the potential impact, if any,” Romero said.

While the Philippines relies heavily on imported fuel, the DOE said it is still too early to project the impact of the incident.

“It is premature at this moment to say that the Saudi Aramco incident would have an adverse impact on the country. The DOE is closely monitoring developments in the international markets until the last trading day on Friday to fully assess any impact on prices,” it said.

“The impact (on) prices, if any, may be felt by Tuesday next week. That is if there will indeed be an adverse impact,” the energy department said.

In a text message, DOE Assistant Secretary Leonido Pulido said that while the impact of the drone attacks would not be immediate, the DOE is working on several mitigating measures.

One of them is to ensure compliance of oil companies with the minimum inventory requirement.

“Based on submission of the oil companies, their compliance is more than the minimum,” Romero said.

In a separate statement, Pilipinas Shell Petroleum Corp. said it is closely monitoring the developments in Saudi Arabia and the world markets.

“Rest assured that Pilipinas Shell will exert all efforts to ensure continuous supply of fuel to the motoring public and all our customers,” it said.

Meanwhile, Romero said the DOE is also looking to increase the country’s supply of crude from other countries like Russia and Malaysia.