Manila: Domestic oil prices are anticipated to decrease by as much as PHP5 per liter next week, reflecting recent developments in the Middle East. Jetti Petroleum president Leo Bellas has indicated that both diesel and gasoline prices could see a reduction ranging from PHP4.50 to PHP5 per liter.

According to Philippines News Agency, Bellas attributed the anticipated rollback to a retreat in oil prices prompted by renewed hopes for a diplomatic breakthrough in the US-Iran conflict. This development has eased the geopolitical risk premium, despite ongoing uncertainties and risks associated with Red Sea shipping. The decrease in crude oil prices has led to a notable drop in diesel and gasoline prices across Asia, as the easing geopolitical risks have reduced the recent supply premium.

Bellas further noted that the stronger Philippine peso against the US dollar this week has contributed additional downward pressure on domestic fuel prices. However, he cautioned that market fundamentals remain firm due to strong demand and tightening supply. This is attributed to continued disruptions in Middle East exports through the Strait of Hormuz and from Saudi Red Sea ports, which limit the availability of feedstock for Asian refiners.

Despite the favorable outlook for a price rollback, Bellas warned that further downside is limited due to concerns over the tightening global supply pool, as Russian product outflows continue to decline. He also emphasized that ongoing supply disruptions and conflicting political statements from the US and Iran are maintaining price volatility, with a potential for increasing upside risk.

In the current week, fuel prices have already declined between PHP0.60 and PHP2.10 per liter, offering some reprieve to consumers.