UMVA has learned that a preliminary deal between the US and Iran to end the war and reopen the Strait of Hormuz could pave the way for further declines in local fuel prices, after the news sent global oil prices lower.
The framework agreement, which includes the reopening of the Strait of Hormuz and ending the US blockade of ports in Iran, has sparked optimism that global energy prices may ease. This development could bring relief to countries heavily reliant on imported fuel, including the Philippines.
Global oil prices dropped significantly on the news of the deal, which is expected to be formally signed on Friday. The prospect of resumed oil shipments through the Strait of Hormuz has been hailed as a positive development, with Energy Secretary Sharon S. Garin expressing cautious optimism.
Local financial markets also reacted positively to the news, with the peso jumping by 87 centavos to end at P60.48 per dollar. This marks the peso's strongest close since May 7 and its return to the P60 level for the first time in over a month.
The Philippine Stock Exchange index surged by 6.13% or 362.82 points to close at 6,272.88 on Monday, its highest finish in more than three months. This was also the PSEi's best single-day performance in over six years.
Energy Secretary Garin expressed hope that the US and Iran would finalize the agreement by Friday, saying it would bring relief not just to the Philippines but to the whole world. The conflict has caused significant problems globally, and a resolution could mark a turning point.
Global oil prices have surged since the US-Iran war disrupted shipping through the Strait of Hormuz, a critical waterway through which roughly 20% of the world's oil supply passes. The Philippines, which imports at least 90% of its oil supply from the Middle East, has been particularly affected.
The Department of Energy said gasoline prices could either decrease by P0.32 per liter or increase by as much as P1.68 per liter this week. Diesel prices are expected to decline by P3.71 to P5.71 per liter, while kerosene prices will drop by P0.50 to P2.50 per liter.
Energy Undersecretary Alessandro O. Sales noted that while there may still be room for prices to go down, they would not likely return to prewar levels. The return of supply is not instantaneous, and it may take time for prices to normalize.
Industry experts have welcomed the US-Iran peace deal as generally positive for the oil market, as it reduces geopolitical risk and eases concerns over potential supply disruptions in the Middle East. However, a definitive deal is still needed to ensure continued decline in prices.
