Oil prices rose again in the global market on Thursday (Friday in Manila) despite an agreement by major crude producers to boost output more than expected in a move sure to set off price increases in pumps at stations across the world, including the Philippines.
In Vienna, the OPEC+ group decided to add 648,000 barrels per day (bpd) to the market in July, up from the 432,000 bpd increases in recent months, and a shift from the cartel’s recent stance of sticking to a planned pace of monthly production hikes.
The announcement came after European Union leaders agreed to ban more than two-thirds of Russian oil imports as part of a sixth package of sanctions on Moscow over the Ukraine war.
But the action by producers did not appear to be enough to calm oil markets, with futures contracts rising more than one percent.
The jump in prices reflects “doubts the cartel members can deliver on their promises,” TD Securities’ Bart Melek said in a note.
He warned that oil prices could spike “well above” $120 a barrel in the peak summer period amid tight inventories, geopolitical risk, and uncertainty over OPEC (Organization of Petroleum Exporting Countries).
Last week, local oil firms boosted pump prices of diesel fuel by P1.20 but cut gasoline prices by P1.60 per liter. Year-to-date adjustments stand at a net increase of P25.55 per liter for gasoline and P29.10 per liter for diesel.
According to Department of Energy Director Rino Abad, based on the first four days of training in the world market this week, gasoline prices have already risen by two pesos—and P6 for diesel.
This was the effect of Russian oil being banned across Europe, so the producers need to look for other sources of oil to make up for it, he said.
“For the coming 1 to 2 weeks initially higher prices will kick in because definitely EU member countries are arranging alternative sources of fuel, and because our country’s oil sources, most of them in the Middle East, will likely join the fray there too,” Abad said.
Meanwhile, transport groups vowed to “bury” the Land Transportation Franchise and Regulatory Board (LTFRB) with complaints next week over the government’s inaction on their fuel subsidies during the COVID-19 pandemic, and especially with pump prices poised to rise again in a few days.
In an interview over radio DZRH, Liga ng mga Transportasyon at Operators sa Pilipinas national president Orlando Marquez said public transport groups would try to pin down LTFRB chairman Martin Delgra, who they said has not acted on their petitions for a fare hike amid the global oil crisis.
Marquez said of Delgra: “He’s more slippery than a catfish. He doesn’t even talk to us, he doesn’t even have a public consultation.”
The LTOP chief said transport workers—particularly those still plying jeepneys not covered under the PUV modernization program—say they still feel left behind by the government’s service contracting project, as they haven’t received their subsidies yet.
Marquez criticized Delgra’s leadership, saying the LTFRB only made life difficult for drivers in the middle of a pandemic.
“We intend that all the wrongs that he has implemented will be referred to the court so that we can leave him with a lesson,” he also said in Filipino.
Despite the coming oil price hikes, the LTFRB on Friday highlighted the successes of its service contracting program.
It noted that as of June, 64,157 public utility vehicle units have been onboarded under the government’s service contracting program, where they are paid based on how many kilometers they run instead of how many passengers they take in.
Based on its latest data, the agency also said it had already distributed P1.17 billion worth of fuel subsidies to 68% of its beneficiaries. For service contracting units, 4,368 routes have also been opened.
Asked about routes still left unopened since transport was shuttered due to the COVID-19 pandemic, Delgra said local government units were responsible for “determining and approving…what they need on the ground.”
The LTFRB said routes are still continuously being opened, but that they are doing so gradually to safeguard the health of transport workers and commuters.