The Philippines is one of the many countries most vulnerable to any tension in the Middle East region. It heavily depends on oil imports from the region and large remittances from Filipinos working in that part of the world.
A Middle East war will result in the steep rise in world oil prices once shipping lanes and supply routes are disrupted in the strategic Persian Gulf and the Strait of Hormuz. The full-blown conflict will endanger the lives of millions of overseas Filipino workers and cause global economic recession.
President Rodrigo Duterte has quickly responded to an emerging crisis in the Middle East. He ordered all government agencies to repatriate some 4,000 Filipino workers in Iraq after a US drone attack killed a top Iranian general in Iraq on Jan. 3. Iran retaliated a few days later when it launched dozens of missiles on Iraq’s al Asad Airbase, home to American troops.
The brewing crisis, however, should be viewed with caution and not alarm. Bangko Sentral ng Pilipinas Governor Benjamin Diokno called for prudence and a rational assessment of the situation.
The country’s chief banker cited that world oil prices did not spike much in the aftermath of the US drone attack. Global oil prices climbed by over 4 percent following Pentagon’s confirmation that an airstrike in Baghdad international airport on Jan. 3 killed top Iranian commander Qasem Soleimani. Brent rose 4.4 percent to $69.16 per barrel, while WTI increased 4.3 percent to $63.84.
But oil prices retreated later when market speculators quickly cashed in on their gains. It seems global market players are more concerned on the US-China trade war and its resolution than the US-Iran tiff.
The US-Iran standoff also may not make a dent on foreign exchange remittances from the Middle East. The bulk of remittances come from Saudi Arabia and other emirates in the region.
Any political tension in the Middle East is a cause for worry, especially with the Philippines given its millions of workers in the region and the volatile character of world oil prices. But prudence should guide the government in dealing with the emerging situation.