Manila: Domestic fuel prices are projected to decline by as much as PHP4 per liter, following a significant increase this week, as market expectations for risks from the US-Iran conflict eased.

According to Philippines News Agency, Jetti Petroleum president Leo Bellas cited price developments in the international market as of Thursday, indicating that diesel prices are likely to decrease between PHP3.50 and PHP4 per liter, while gasoline prices might drop between PHP0.25 and PHP0.75 per liter.

Bellas explained in a message to the media on Friday that fuel prices dropped this week because the threatened US sanctions did not meet the market's expectations. Investors considered the economic pressure a lower-risk path for physical supply compared to military escalation, which reduced the oil market's anxiety and eased immediate supply concerns.

He further noted that prices are also influenced by signals of potential mediation efforts to end the war and reopen the Strait of Hormuz. Iran's resumed talks with Oman indicated a move towards negotiation, although the market remains constrained and supply disruption risks persist.

Bellas added that another factor improving supply and addressing risks was the increased outflow of refined products from China due to renewed export allowances. This included additional flows from the US and India. However, he cautioned that the recent rebound in global oil prices, following reports that the US is not interested in returning to the ceasefire deal terms with Iran, could limit the potential rollback on local pump prices next week, possibly pushing them to the lower limits of the initial estimated range.

Data released by the Department of Energy on Monday indicated a price hike cap of PHP2.31 per liter for diesel, PHP1.08 per liter for gasoline, and PHP0.95 per liter for kerosene.