MANILA, Philippines – After drone attacks on Saudi Arabia’s oil facilities slashed the output of the world’s top producer by half, Philippine Foreign Secretary Tedoro “Teddyboy” Locsin Jr said the incident will affect the Philippines “deeply.”
“This is serious,” Locsin tweeted. “It will – not could – affect us deeply; to put it bluntly, an oil shortage or steep rise in oil price will rock the Philippine boat and tip it over.”
Oil prices soared more than 10% on Monday, September 16, after Tehran-backed Huthi rebels in neighboring Yemen hit two sites owned by Saudi state-run oil giant Aramco on Saturday, September 14, effectively shutting down 6% of the global oil supply. (READ: Drone strikes on Saudi Arabia ripple across oil market, diplomacy)
Tensions also heightened as US President Donald Trump blamed Iran for the attacks and raised the possibility of a military strike on the country. (READ: Trump says U.S. ‘locked and loaded’ to respond to Saudi oil attack)
Stable for now: According to the Department of Energy (DOE), the effects of the attacks on Saudi oil plants have yet to be felt on the Philippines as supplies remain sufficient.
DOE Oil Industry Management Bureau Assistant Director Rodela Romero said initial reports showed oil firms in the country had enough supply for now and that the agency was set to meet with representatives of local oil companies later this week to assess the situation further.
“Base sa monitoring natin, may enough minimum inventory requirement sila base sa report nila. More than the minimum inventory requirement ang ating supply na nasa bansa,” Romero said in an interview with CNN Philippines.
(Based on our monitoring, oil companies reported having enough minimum inventory requirement. Current supply is more than the minimum requirement.)
Philippine Energy Secretary Alfonso Cusi likewise sought to assure the public, saying concerned energy agencies were closely monitoring the situation after an emergency meeting was held on Sunday, September 15, at the Department of Energy’s headquarters in Taguig City.
“We are seeking to ensure that the energy family will be sufficiently prepared to face the potential impact of this unfortunate incident, if any, on the country,” Cusi said on Monday.
The agency reiterated impact of the incident was still premature and that impact on prices, if any, may be felt by Tuesday next week. Despite this, Senator Win Gatchalian said the DOE should “formulate a contingency plan that will temporarily replace Saudi oil in the short term until supply is normalized.”
Gatchalian added the incident highlighted the need for DOE to diversify the Philippines’ oil supplier portfolio as some 33.7% of the Philippines’ crude oil is imported from Saudi Arabia as of 2018, making it the country’s top source.
Impact of attacks: According to Middle East expert James Dorsey from the S. Rajaratnam School of International Studies in Singapore, attacks on Saudi oil plants were most likely to affect the Philippines economically.
“Worst case scenario would mainly be economic. You’ll have a higher energy bill and that’s going to impact the economy,” Dorsey told Rappler in an interview. As for how long price hikes across the world would last, Dorsey said this would ultimately depend on Saudi’s efforts to mitigate the effect of strikes on oil facilities.
Beyond this, Dorsey said, larger developments in the Southeast Asian region may depend on how the Yemen war evolves.
This is because the Yemen war resonates strongly in Southeast Asia where there are Muslim communities of Yemeni origin. Divisions within Muslim communities across the region, particularly towards Saudis, may also reverberate, he said.
Following this, Dorsey said Southeast Asian leaders should remember to engage with various Muslim communities in their countries moving forward.
Prior to the attacks on Saudi oil plants, Huthi rebels earlier claimed attacks on other facilities were “retaliation” for the Riyadh-led bombing campaign on rebel-held areas in Yemen. – with reports from Agence France-Presse/Rappler.com
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