Diesel Could Drop by Up to ₱8 Next Week as Global Oil Prices Ease

After three consecutive weeks of major fuel price increases, the Department of Energy (DOE) is now seeing a much different picture in the global oil market. DOE Oil Industry Management Bureau Director Rino Abad said Friday that diesel could see a rollback of as much as 8 Pesos per liter, while kerosene could go down by around 6 Pesos per liter. Gasoline was initially estimated to drop by about ₱0.90 per liter, although the final figure remained less certain pending the last trading data.

An oil industry estimates the possible diesel rollback between 7 to 7.50 Pesos per liter, while gasoline could fall by 50 centavos to 1 Peso a liter. The estimates are based on movements in the Mean of Platts Singapore (MOPS), together with foreign exchange movements during the first four trading days of the week.

The biggest reason behind the possible rollback is the easing in international oil prices after the market began seeing signs that some disrupted supplies could return.

Oil prices started the week lower as traders reacted to hopes of renewed US-Iran diplomatic talks and signs that Saudi Arabia was beginning to recover some of its oil shipments. Brent crude briefly fell below US$100 per barrel early in the week, reaching its lowest level in almost two weeks.

Saudi Arabia’s recovering exports were particularly important for the market. DOE officials said Saudi Arabia had announced the partial resumption of its oil export operations, helping calm concerns about supply from the Persian Gulf. Reuters also reported that Saudi shipments through the Strait of Hormuz had increased significantly compared with August levels.

The market, however, remained extremely volatile. Brent crude climbed back above US$106 per barrel on Friday after renewed Houthi attacks on Saudi Arabia and continuing uncertainty surrounding the US-Iran conflict. That means the oil market isn’t exactly back to normal, prices simply became less pressured during much of the period used to calculate next week’s Philippine pump-price adjustment.

Diesel has been particularly sensitive to the supply disruptions affecting the global market. Conflicts involving Iran, Russia and Ukraine have disrupted major diesel-producing and exporting regions, while refinery and shipping problems have kept international diesel supplies tight. Reuters reported earlier this week that global diesel prices had reached record levels as supply disruptions intensified.

That also explains why the expected rollback is much larger for diesel than gasoline. The recent global decline in fuel prices is now being reflected in the Philippine pricing formula, particularly in the Asian market benchmark used by local oil companies.

Oil companies are expected to announce their official price adjustments on Monday, with the new prices taking effect on Tuesday. Until then, the 7-8 Pesos diesel, around 5-6 Pesos on kerosene and roughly 1 Peso-or-less gasoline figures should still be treated as estimates rather than final pump-price adjustments.