Big fuel price hike set for July 21 as Middle East tensions flare again

It's a double-digit price increase per liter for diesel and kerosene for July 21 to 27

MANILA, Philippines – Motorists face another steep increase in pump prices starting Tuesday, July 21, as renewed fighting in the Middle East again pushes up global oil and refined fuel prices.

In a press conference on Monday, July 20, Energy Secretary Sharon Garin announced the following fuel price adjustments for the week of July 21 to 27:

• Diesel – increase of P10.68 per liter
• Gasoline – increase of P3.65 per liter
• Kerosene – increase of P11.77 per liter

The adjustments will take effect on Tuesday, July 21.

The price increase follows last week’s hike, when gasoline prices rose by around P1 per liter, while diesel increased by P2.62 to P4.62 per liter and kerosene by P2.22 to P4.22 per liter.

Ahead of the official July 21 adjustment, DOE officials had warned of an “extra-large” increase, with fuel prices potentially rising by more than P10 per liter.

The latest hike comes as the DOE moves back to stricter fuel pricing rules. After weeks of announcing broad price ranges, the agency earlier said it would return to prescribing a single maximum price increase or minimum rollback to make pump price monitoring tighter and protect consumers.

Garin said the use of price ranges was meant to give oil firms flexibility when market conditions were stabilizing. But the DOE shifted back to tighter rules after observing that many retail stations tended to implement price increases at the maximum end of the allowed range.

Renewed hostilities

The latest price shock is being driven by renewed hostilities in the Middle East, particularly around the Strait of Hormuz, one of the world’s most important oil and gas shipping routes. The United States has launched a fresh round of airstrikes against Iran after US military personnel were killed in an Iranian attack.

The Strait of Hormuz remains a key risk to global fuel markets because a large share of the world’s crude oil and liquefied natural gas passes through the narrow waterway between Iran and Oman. Any disruption to tanker traffic can quickly affect crude and refined product prices, including the Mean of Platts Singapore (MOPS) which directly influences Philippine pump prices.

Much of the Philippines’ fuel is imported as finished petroleum products, including diesel and gasoline. This means local pump prices are more directly influenced by regional traded prices of finished fuels, not the price of Dubai crude alone, which has fallen in recent weeks.

Despite intermittent easing in crude prices in recent weeks, local pump prices remain well above levels seen before fighting involving Iran and US-Israeli forces erupted on February 28. In the last full week before the conflict, DOE data showed common retail prices in Metro Manila at P56 per liter for gasoline RON95, P54.70 per liter for gasoline RON91, P55 per liter for diesel, and P83.47 per liter for kerosene. – Rappler.com