Peace talks pump brakes on PH fuel prices, fuel hikes hit reverse

After weeks of consecutive increases, fuel prices in the Philippines are expected to decline sharply next week. The projected rollback is driven largely by diplomatic momentum between the United States and Iran, which has eased fears of prolonged supply disruptions in one of the world’s most critical oil shipping lanes.

Diesel prices could drop by ₱6.50 to ₱7.50 per liter beginning June 2, while gasoline prices may fall by ₱3.50 to ₱4.50 per liter, according to industry estimates released on May 29.

These figures would mark the biggest single-week reversal in recent months.

Meanwhile, the Department of Energy (DOE) projects that kerosene prices could decrease by up to ₱10 per liter.

An industry source, who requested anonymity, said global crude and refined fuel markets have come under significant downward pressure in recent days.

“Crude and refined fuel products prices are pressured by improving sentiments that the US and Iran are moving closer towards a peace deal, even though both parties still remained at odds over key issues, and growing optimism on the prospect that the Strait of Hormuz will be reopened soon,” the source said.

The Strait of Hormuz, a narrow channel between Iran and Oman, handles nearly a fifth of the world’s oil supply. Market sentiment has been significantly impacted by its possible reopening to regular maritime commerce following reports that Washington and Tehran agreed to extend a ceasefire for another 60 days.

The Middle East war that began in late February strained supply chain strain, pushing diesel prices higher due to tight supply conditions.

“Supply tightness in the diesel market is seen easing down, weighing on the price benchmark, as recent market developments point to some improvement in supply conditions, with refiners increasingly able to secure alternative crude supplies,” the source added.

According to them, Asian gasoline prices were likely to trade within a tight range, with downside risks stemming from Middle East developments, although market fundamentals remain fragile amid rising seasonal demand and declining gasoline inventories. 

DOE Director Rino Abad said fuel prices, while still elevated, have already dropped significantly from their peak. Prices eased to around ₱70 to ₱80 per liter from nearly ₱140 per liter recorded shortly after the Middle East conflict broke out in late February.

“Ito’y dahil maganda ho ang naging resulta sa mga pronouncement ng negotiation between U.S.-Iran,” Abad stated.

Pump prices in Metro Manila might drop to as low as ₱66.66 per liter for diesel and ₱68.50 per liter for regular gasoline if the anticipated rollbacks come to pass. 

Diesel Plus might cost between ₱76.66 and ₱92.06 per liter, and premium gasoline grades might cost between ₱76.48 and ₱106.20.

Abad added that the government has so far released about P40 million in fuel subsidies to public utility vehicle drivers under the P10-per-liter Fuel Subsidy Program, part of the broader UPLIFT Program, which grants qualified drivers up to P1,500 per vehicle per week for three months. 

Around 1,263 gasoline stations have joined the program nationwide, with more expected to be added in the coming weeks.