This will be the first price cut for oil products this year after a series of increases over the past two months which added up to a hike of more than P2 per liter.
Further cuts may be forthcoming, the officials said.
"This could be the first in a series of possible rollback in prices given the recent downward trend in international crude prices," said Virginia Ruivivar, corporate communications manager for Petron Corp.
Dubai crude, the benchmark used by local oil firms in pricing their products, has dropped to $22 per barrel since the start of the US-led attack on Iraq, from more than $30 per barrel, officials said.
The Philippines imports its crude oil mostly from the Middle East.
Analysts had expected oil prices to drop once the strike on Iraq began, but cautioned that prices were still vulnerable to a sudden leap on any sign of a snag in the military campaign.
Petron, the country’s largest refiner, said its rollback in prices would go into effect from last midnight.
With the cut, the suggested diesel retail price in Manila will be P16.15 per liter, Ruivivar said, adding that the price cut was implemented to "give the public the early benefit of the recent decline in crude prices."
"We hope that the decline will be permanent and that oil prices will be stable at a low range in the coming months," she said.
The second-largest refiner, Pilipinas Shell Petroleum Corp., and Caltex Corp. said their diesel price cut would be effective at 6 a.m. today. Pilipinas Shell is a member of Anglo-Dutch energy giant Royal Dutch/Shell group.
"While the situation doesn’t warrant a rollback…we are forced to do so because of competitive pressure," Pilipinas Shell external affairs general manager Roberto Kanapi told reporters.
As of March 17, the Philippines had 62 days worth of crude oil and oil products, the highest level of stocks in 10 years.
Petron is 40 percent owned by the government and another 40 percent by Saudi Aramco. Around 19 percent is held by the public and the remaining one percent by Petron employees.
Industry sources said Petron, being partly owned, was under pressure from the government to reduce prices, particularly for diesel amid threats of fare hikes by transport groups.
Government officials were not immediately available for comment.
Officials earlier voiced concern that a war in Iraq might cause crude oil prices to go up, which might eventually cause prices of basic commodities to shoot up as well.
President Arroyo earlier said her administration would regulate petroleum prices if global crude oil prices rise due to the war in Iraq. Petron — being partly owned by the government — should be the first to lower prices and the last to raise prices, she said last week.
The government under the administration of Fidel Ramos deregulated the downstream oil sector in the 1990s, allowing market forces to set pump prices after decades under a regulated pricing regime.