No oil supply crunch yet – DOE

MANILA, Philippines — The Department of Energy (DOE) has allayed fears of an oil supply crunch in the country following further oil output cuts announced recently by Saudi Arabia and other OPEC+ oil producers.

DOE Oil Industry Management Bureau director Rino Abad, in an interview with “The Chiefs” on One News Tuesday night, said “the country is currently not experiencing any oil supply issues.”

“The market was able to compensate and absorbed the reduction at this point in time. So really, there’s no crunch now,” Abad said.

“OPEC’s pronouncements are going to be implemented starting May,” he added, referring to the recently announced additional oil output cut of 1.16 million barrels per day.

In October last year, the OPEC+ agreed to cut output by two million barrels per day from November until the end of 2022.

Abad, however, said the oil cartel actually cut its output by just 40 percent of the planned two million barrels per day, representing only about 800,000 barrels per day.

“So there is really no supply crunch now, and the market now is really doubtful that they will be able to deliver the planned 1.16 million barrels per day cut when actually, they are not able to deliver the 1.2 million barrels per day reduction they originally planned to do way back in November last year,” Abad said.

“To cut it short, there’s no supply crunch, unless OPEC really cut its output by around 2.8 million barrels per day,” he said.

In terms of prices, Abad said these are expected to remain volatile given that supply and demand are currently balanced.

“This is going to be a question now of daily monitoring, because we have now the result of the Monday trading price of this week, and international trading price for Monday is negative already,” Abad said.

“In fact, if we continue this trend up until Friday, then we will be expecting a price rollback next week,” he said.

Given the recent upward movement in the international oil market, domestic pump prices went up last Tuesday for a second straight week, with oil companies implementing hefty price increases for diesel, gasoline and kerosene.