MANILA — Oil prices soared on the first day of trading in the world market this week, as Saudi Arabia closed its alternative pipeline due to drone attacks.
Based on the figures from the Mean of Platts Singapore, prices of all fuel products rose considerably:
- Diesel - P9.40/L increase
- Gasoline - P4.40/L increase
- Kerosene - P7.90/L increase
Some industry sources said the market reacted to the closure of Saudi Arabia's East-West pipeline, which is a major escalation in the supply disruption picture.
With Strait of Hormuz flows already near collapse and the pipeline now shut, Saudi Arabia has effectively lost both of its primary oil export routes simultaneously, according to an industry source who refused to be identified.
Aside from the closure of the East-West pipeline, the Houthi advancement toward Bab al-Mandeb Strait introduces a third chokepoint risk, threatening Red Sea shipping on top of the existing Hormuz crisis, added the source.
The Department of Energy has already certified that Dubai crude prices have gone beyond $80/barrel, which is a requirement for the government to suspend the excise tax on fuel.
But when asked if the DOE recommends the excise tax suspension of diesel and gasoline, Garin said she would rather let the economic managers or the Development Budget Coordination Committee (DBCC) decide on the issue.
These are the excise taxes imposed on fuel products:
- Gasoline - P10/L
- Diesel - P6/L
- Kerosene - P5/L
- LPG - P3/kg
If the rise in diesel prices on the first trading day is sustained until Friday, Garin said motorists should expect elevated prices in the next weeks due to the absence of any development that can bring truce in the Middle East.