Oil firms slashed pump prices by as much as P2.60 per liter effective 6 a.m. Tuesday—a little lower than the forecast of the Department of Energy—as the OPEC+ oil cartel agreed yesterday to cut production for the first time in more than a year as it seeks to lift prices that have tumbled due to recession fears.
OPEC+ said in a statement that it decided to reduce output by 100,000 barrels per day in October, returning to the production level of August.
Oil prices rose by more than three percent following the announcement, with the international benchmark, Brent, exceeding $96 per barrel while the US contract, WTI, reached almost $90.
Earlier in the day, Petron said will implement the following price rollbacks: P2.60/li for gasoline; P1.55/li for diesel, and P1.60/li for kerosene.
Other oil firms also cut pump prices, namely Phoenix Petroleum Philippines, PTT Philippines, Seaoil Philippines, Chevron Philippines, Cleanfuel, PetroGazz, and Flying V.
Rino Abad, director of the DOE’s Oil Industry Management Bureau, last week said gasoline prices are expected to go down this week by P2.80/li, diesel by P1.82/li, and kerosene by P1.80/li.
Oil companies last raised pump prices by P1.40 per liter for gasoline and P6.10 for diesel and kerosene on Aug. 30.
DOE said these resulted in total year-to-date adjustments at a net increase of P19.55 per liter for gasoline, P37.80 per liter for diesel, and P33.20 per liter for kerosene.
Abad said traders are looking at whether central banks in the United States and Europe will impose another round of interest rate hikes that could impact economic growth.
OPEC+, a 23-nation coalition led by Saudi Arabia and Russia, had agreed to huge cuts in output in 2020 when the COVID pandemic sent oil prices crashing, but it began to increase production modestly again last year as the market improved.
Oil prices soared to almost $140 a barrel in March after Russia invaded Ukraine.
But they have since receded below $100 per barrel amid recession fears, COVID lockdowns in major consumer China, and Iran nuclear talks that could bring Iranian crude back into the market.
The move to cut production could irk the United States as it has pressed the group to increase output in order to bring down energy prices that have fueled decades-high inflation.
In efforts to curb rising oil prices, the United States and its allies have released crude from their emergency reserves.
Caroline Bain, the commodities expert at Capital Economics, said the cut was not a total surprise—a “little more than symbolic”—as OPEC+ has struggled to meet its quotas due to lackluster production in some of its member countries.
“The bigger picture is that OPEC+ is producing well below its output target and this looks unlikely to change given that Angola and Nigeria, in particular, appear unable to return to pre-pandemic levels of production,” Bain said. With AFP