PHL oil prices, supply not seen to be affected by tension in Middle East

Oil supply in the Philippines remains stable despite the ongoing geopolitical tension between Saudi Arabia and Iran, experts said on Tuesday.

"Impact will depend on how the supply of oil would be affected by the tension. But then, demand for oil has been declining," environmental economist Dr. Oggie Arcenas said in a text message.

"Put these two together and they might cancel each one's effect on price of oil, so (there would be an) inconclusive effect," he added.

In terms of the medium term effects of the geopolitical tension, an oil price hike is not expected.

"Unless (there is a) war, continued low prices (are expected as a) medium term (effect)," Dr. Carlo A. Arcilla, director of the National Institute of Geological Sciences - College of Science of the University of the Philippines (UP) said in a separate text message.

Arcilla said that aside from Saudi Arabia, there are already other countries that increased oil production.

"There are other players now. Many (players) now," he said, noting that some countries have been able to produce oil from fracking or the process of using steam pressure to extract oil from peat bogs, tar sands, and shale. Russia is another big oil producer, he added.

The Department of Energy (DOE) said the current tension in the Middle East is not yet seen to affect the Philippines because of its oversupply of oil.

"Hindi namin pa nakikita na magkakaroon ng impact yung conflict between Saudi and Iran kasi oversupply pa yung ating market with OPEC's (Organization of the Petroleum Exporting Countries) decision na hindi maglower ng production," Melita Obillio, DOE's director of the Oil Industry Management Bureau said in a report on GMA-7's "24 Oras."

Meanwhile, Arcilla noted that Saudi Arabia will remain as one of the top oil producers in the world.

"Saudi is not cutting down production even with low prices to corner market share and force out high cost producers. When oil prices rebound, they make hay," he said.

The latest data available from the DOE shows that diesel prices range from P20.55 to P23.95 per liter; gasoline prices range from P33.20 to 40.65 per liter; and liquefied petroleum gas or LPG 11-kilogram cylinders range from P470.00 to P680.00.

The DOE added that most of the oil companies in the country cut down prices in 2015.

The price adjustments for gasoline and diesel totaled a net decrease of P0.80 per liter and P7.14 per liter, respectively.

However, there was an oil price increase in Asia on Monday after major crude oil producer Saudi Arabia cut diplomatic ties with Iran following a row over the execution of a Shi'ite cleric.

[http://www.gmanetwork.com/news/story/549923/money/economy/oil-prices-rise-after-saudi-arabia-cuts-ties-with-iran] — Jon Viktor D. Cabuenas, BAP, GMA News