How will a $200-per-barrel oil price spike affect PH?

Rising tensions in the Middle East are already pushing fuel prices higher, raising concerns over how a possible surge in global oil prices could affect the Philippines.

In recent days, local oil companies have begun adjusting pump prices as the conflict involving Iran, the United States, and Israel escalates.

The Department of Foreign Affairs (DFA) earlier warned that the conflict could last between four and eight weeks.

Iranian authorities also warned that oil prices could spike to as high as $200 per barrel if vessels transporting crude through the Strait of Hormuz become targets of attacks.

The Strait is one of the world’s most critical shipping routes for global oil supply.

According to a GMA News report, the Philippines could be among the first Asian economies to feel the effects of supply disruptions because it relies heavily on imported fuel.

Arsenio Balisacan, secretary of the Department of Economy, Planning and Development, earlier warned that inflation could reach 7.5% in March if crude oil climbs to $140 per barrel.

Fuel retailers have already projected significant increases this week, with gasoline prices expected to rise by P7 to P13 per liter, diesel by P17.50 to P24.25, and kerosene by P32 to P38.50 per liter.

Economists said higher fuel costs could quickly drive up prices of goods and services nationwide.

Transportation, electricity generation, logistics, and food production all depend heavily on fuel, meaning price increases could spread across the economy.

Rising inflation may weaken consumer purchasing power, which could in turn slow economic activity and dampen stock market performance.

Analysts have also warned that medical equipment and healthcare services could become more expensive as global supply chains react to rising fuel costs.

The Department of Trade and Industry (DTI) has warned businesses against hoarding or profiteering from essential goods amid rising economic pressures.

Meanwhile, the Philippine peso recently slid to a historic low of P59.735 to $1, adding further pressure on import costs.

Despite fears of a $200-per-barrel surge, crude oil prices were trading at around $100 per barrel as of Friday.

Chris Wright, the U.S. Department of Energy secretary, said such a price level is unlikely.

The International Energy Agency (IEA), a group of 32 member countries, has also agreed to release 400 million barrels of oil from strategic reserves to help stabilize global supply.—Jiselle Anne Casucian/MCG, GMA Integrated News