Oil prices surged Monday after drone attacks on two Saudi facilities over the weekend slashed output in the world’s top exporter by half, leading a top administration official to warn that a steep rise in the cost of crude would “rock the Philippine boat and tip it over.”
READ: Drone hits spark fires at Aramco oil depots
“This is serious. It will… affect us deeply,” Foreign Secretary Teodoro Locsin Jr. said Monday after the Iranian-backed Huthi group in Yemen launched drone attacks on the Abqaiq oil facility, the heart of the Saudi oil industry on Saturday.
“So everybody shut the f*** up and focus. No more clowns. Declaring state of emergency won’t save our economy but kill it,” the country’s top diplomat warned in his Twitter account.
The Energy department will meet with oil industry officials this week to look into the sufficiency of inventory levels after the drone attacks.
“We are seeking to ensure that the energy family will be sufficiently prepared to face the potential impact of this unfortunate incident, if any, on the country,” Energy Secretary Alfonso Cusi said. “Rest assured that the DOE… is closely monitoring the situation, and will keep the public properly informed of developments.”
The stock market closed virtually flat Monday in cautious trading, as investors weighed the new tension in the Middle East.
Cusi convened an emergency meeting Sunday with the DOE’s Electric Power Industry Management Bureau and Oil Industry Management Bureau; the National Electrification Administration, the National Power Corp., Philippine National Oil Co. and PNOC Exploration Corp. at the Energy department’s headquarters in Taguig City.
“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 the prices,” the DOE said.
Any adverse impact, it added, would be felt by Tuesday next week.
The country’s biggest oil firm Petron Corp. said there would be no supply disruption from its end. “We have adequate supply to support our domestic requirements,” a company statement said.
Pilipinas Shell Petroleum Corp., the country’s second biggest oil company, said it was monitoring the developments in Saudi Arabia and the world markets, and said it would exert all efforts to ensure a continuous supply of fuel.
Both contracts pared the gains as the day wore on but were still up nearly 10 percent.
China on Monday called for the US and Iran to “exercise restraint.”
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
The surge in crude lit a fire under energy firms, with Hong Kong-listed CNOOC up 7.4 percent and PetroChina 4.3 percent higher. Woodside Petroleum rallied more than 4 percent in Sydney.
However, airlines took a hit from the prospect of higher fuel costs. Cathay Pacific dropped 4 percent in Hong Kong, Air China dropped 4.6 percent in Shanghai and Qantas dived more than 4 percent in Sydney.
In related developments:
* Senator Sherwin Gatchalian said the recent surge in oil prices underscore the need for the country to diversify its sources of imported oil to insulate consumers from price volatility. He said the Philippines has been importing 33.7 percent of its crude oil from Saudi Arabia as of 2018, making it the country’s top supplier.
* Bayan Muna Rep. Carlos Zarate pushed for a congressional inquiry into the pricing schemes of local oil companies as a way to protect the public from overpricing.
* Philippine Embassy in Riyadh advised Filipinos in Saudi Arabia to remain calm but vigilant following the attacks. “The embassy is closely monitoring the situation and coordinating with the concerned authorities to ensure the safety and security of all Filipinos in Saudi Arabia,” the embassy said in a statement. With Maricel V. Cruz and AFP
