Oil production cut doesn’t affect PH pump prices: No hike, no rollback either — DTI

FILE PHOTO: Department of Trade and Industry Secretary Alfredo Pascual during a Senate hearing in this file photo taken on December 12, 2022. Senate PRIB file photo / Bibo Nueva España

MANILA, Philippines — The decision of Saudi Arabia and other members of the Organisation of the Petroleum Exporting Countries (OPEC) to cut oil production is unlikely to cause an increase in pump prices in the Philippines, Trade Secretary Alfredo Pascual said on Tuesday.

Pascual said this during the Presidential Communications Office (PCO) briefing after being asked if the Department of Trade and Industry (DTI) expects fuel prices — and eventually, prices of basic goods reliant on transportation — to go up due to Saudi Arabia’s decision.

According to Pascual, they think it is a defensive strategy from the oil-producing countries as oversupply may lead to lower prices of oil, adding that while oil prices may not increase, they may also refrain from going down.

“Eh isang ano ‘to, defensive move para hindi tuloy-tuloy ang pagbaba ng oil, pwede ring hindi magresulta in increase, pero hindi na bababa ng lower level.  Kung hindi nga gagalaw ang presyo, eh ‘di neutral,” Pascual said.

(I think this is a defensive move so that oil prices would not decrease continuously, it may not result in an increase, but oil prices would also no longer decrease.  If the price doesn’t move, then it’s neutral.)

“Kung bumaba pa, baka mag-cut pa uli sila ng production.  Gano’n lang naman ‘yon eh, supply and demand, kung mataas ‘yong supply kumpara sa demand, bababa ang price, kung mas mataas ‘yong demand que sa sa supply, bababa ang price.  So ‘yon ang binabalance ng mga producers,” he added.

(If prices go down further, they might cut production even more.  That’s how it is — supply and demand — if supply is higher than the demand, prices would go down.  So that is what producers are trying to balance.)

Pascual admitted that there may be an impact on the prices of goods if oil prices increase.  But that is if oil prices increase — as the DTI secretary maintains it seems the cut in production would not result in price spikes.

“May impact ‘yan syempre kapag tumaas ang price ng oil pero ang tingin ko nga, baka hindi naman magresulta ng pagtaas overall pero mame-maintain lang where it is para hindi na bumaba,” he noted.

(There’s an impact, of course, if oil prices increase.  But I think it would not result in a higher oil price overall, we would only maintain it so that it does not go down further.)

Last April, Saudi Arabia, and other OPEC+ oil producers announced further cuts in production, estimated to be around 1.16 million barrels per day.  Several analysts believe such a move would cause an immediate rise in prices.

The move came as oil prices fell to around $70 a barrel in March — which is the lowest in 15 months.

Saudi Arabia, which accounts for a portion of oil imported by the Philippines, would cut production by 500,000 barrels per day.

READ: OPEC+ announces surprise oil cuts of around 1.16 mbpd from May to year-end 

Earlier, several oil firms rolled back prices of petroleum products — P0.60 per liter for gasoline and P0.30 per liter for diesel.  This means pump prices for gasoline may play around P58 to P65 per liter, and P56 to 63 for diesel.

READ: Oil firms to roll back fuel prices on June 6 

JPV

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