Pump prices may increase by as much as P2.50 per liter for diesel and P1.25 per liter for gasoline this week as the Middle East crisis continues to worsen.
Meanwhile, the Philippine peso further weakened by 8.1 centavos to a fresh record low of 61.721 against the US dollar on Friday as markets expect the US Federal Reserve to keep policy rates on hold for a longer period.
An industry source said that based on the first four days of the Mean of Platts Singapore and foreign exchange averages, diesel is expected to see a price hike of P2 to P2.50 per liter, while gasoline may rise by P0.75 to P1.25 per liter.
“Upside pressure to diesel price re-emerged due to high crude oil prices following a re-escalation of geopolitical risks in the Middle East,” the source said. “The middle distillate market remains structurally tight as stocks decline further and demand normalizing seasonally, further firming up the price of diesel.”
The source added that gasoline prices were supported by tight supplies following a drawdown in global inventories and reduced refinery output. Asian refiners have been forced to process lighter grades of crude, for which they are not optimized, due to a shortage of Middle East crude feedstock.
On May 12, oil firms increased the price of gasoline by P0.40 to P0.47 per liter. Meanwhile, diesel prices saw a significant rollback ranging from P9.53 to P9.60 per liter, and kerosene prices declined sharply by P13.30 per liter, according to the Department of Energy (DOE).
The DOE said the 19th price movement this year has resulted in a total net increase of P46.91 per liter for gasoline, P42.02 per liter for diesel, and P41.16 per liter for kerosene.
Data from the Bankers Association of the Philippines showed the local currency opened at 61.63 per dollar and touched an intraday low of 61.73 before closing at another all-time low. It marked the second straight trading day that the peso sank to record territory.
“The peso reached new lows today after the recent US consumer and producer inflation reports this week reinforced views that the US Federal Reserve might need to keep US policy rates on hold for a prolonged period,” a trader said.
The trader added that the peso might remain relatively weak due to challenges in local fundamentals but occasional interventions by the Bangko Sentral ng Pilipinas could be expected.
