P1/liter increase in oil prices seen next week

MANILA, Philippines - Consumers should brace for an oil price hike of more than one peso per liter next week.

Industry sources said yesterday “the price hike comes amid escalating conflict in Iraq due to clerical wars.”

The benchmark Dubai crude rose by nearly $3 per barrel to nearly $110 per barrel this week (June 16-19) compared to the previous week’s average of $106.60 a barrel mainly due to the worsening violence in major oil-producing country Iraq, they said.

Large areas of the country (north and northwest) are now under control of militant Sunni group Islamic State of Iraq and Syria (ISIS), including the 300,000 barrel-per-day Baiji refinery – the country’s largest – around 250 kilometers north of Iraqi capital Baghdad.

The refinery supplies nearly a third of Iraqi domestic requirements.

Lead elements of ISIS are only several kilometers from the capital itself, according to industry data.

A source said the spreading conflict has stoked fears of oil supply disruptions that could shut in millions of barrels of oil. 

Several oil companies have begun evacuating personnel from major oil fields in the south of Iraq which has not yet been affected by the fighting, the sources added.

Iraq produces 3.3 million barrels of crude oil daily and is the second largest producer in the 12-member Organization of Petroleum Exporting Countries or OPEC.

It is also the third largest exporter of crude after Russia and Saudi Arabia. Iraqi production represents nearly four percent of the world’s total daily consumption of 93 million barrels.

Early this week, oil companies again raised local pump prices by 20 centavos per liter for gasoline and 30 centavos per liter for diesel.

With the price increase, gasoline prices are now P49.70 to P56.40 per liter while diesel prices are at P40.88 to P44.55 per liter, according to the Department of Energy’s latest oil price monitoring report.