Oil prices in PH to rise as tension in Iraq escalates

MANILA, Philippines – Prices of petroleum products are expected to shoot up by over P1 ($0.023) per liter next week brought about by the tension in Iraq.

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 (OPEC). It is also the third largest exporter of crude after Russia and Saudi Arabia.

Iraqi production represents nearly 4 of the world’s total daily consumption of 93 million barrels per day.

Industry sources said oil companies will adjust their pump prices in the next few days as the benchmark Dubai crude rose by nearly $3 per barrel to $110 per barrel mid-June as against the previous week’s average of $106.60 per barrel.

The upcoming oil price hike adds to the list of rising prices of basic commodities like rice, sugar, milk, and garlic, plus the newly implemented jeepney fare hike.

The Department of Energy (DOE) has warned of a possible oil price hike.

 “Gasoline and diesel will surely increase by more than P1 per liter,” one of the industry sources said Friday, June 20.

Also, Asian finished products benchmark Mean of Platts of Singapore (MOPS) also rose, tracking the surge in world crude prices. Gasoline price average has risen by more than $4 per barrel this week compared to last. Diesel average price has increased by more than $3 per barrel over the same period.

The tension in the major oil-producing country continues to worsen. Large areas of the country are now under control by the militant Sunni group Islamic State of Iraq and Syria (ISIS) including the 300,000 barrel-per-day Baiji refinery. It is Iraq’s largest, located 250 km north of the 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.

The spreading conflict has stoked fears of oil supply disruptions that could shut in millions of barrels of oil. Reports had it that 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. – Rappler.com