By Myrna Velasco
Pump prices of gasoline products are anticipated to rise by as much as P1.50 to P1.65 per liter this week, owing primarily to cost upswings in the world market.
Based on the calculation of the oil firms, diesel prices will jump by P0.30 to P0.35 per liter; and kerosene by P0.35 to P0.45 per liter.
Oil companies are expected to increase their pump prices on Tuesday, March 19, based on the conventional cost movement practice of the deregulated oil industry.
Geopolitical factors continue to exert pressure on international prices, including the continuing enforcement of sanctions on Venezuelan oil exports, as well as other supply strain on Middle East producers, primarily Iran.
But as oil experts opined, the upward pressure in prices may not last long, given forecasts of global economic slowdown, plus the remarkable surge in crude production of the United States.
The hike in US oil exports will widen the crude choices of destination-markets, primarily Asia – with it seen matching that of Saudi Arabia and will be surpassing Russia’s scale of exports.
International Energy Agency (IEA) Executive Director Fatih Birol said US production is projected to climb significantly to as high as 13.72 million barrels per day in the next five years from the current 2.78 million barrels/day, the bulk of which could be earmarked for export to Asia as a key landing market.
The hike in production, according to the IEA chief, will be propelled by the Permian basin’s output – with it jumping to 5.5 million barrels per day in 2024 or roughly double from last year’s 2.62 million barrels per day.
Based on the energy think tank’s assumption, export of crude from the US Gulf Coast could expand by as much as 5.1 million to 8.4 million barrels per day in five years from the 2018 level of 4.9 million.
Birol said global oil demand may slow down given the weakening economic figures, including the key markets of India and China in Asia; adding that “there is no peak demand on the horizon.”
For the Permian basin of the US, which is a sedimentary basin straddling the western part of Texas and southeastern part of New Mexico, it was noted that “nearly 41,000 new wells and US$308 billion in upstream spending between 2018-2023” will drive its output growth to the targeted 5.5 million barrels per stream day in the next five years.
Since 2017, production from the Permian region was seen to have grown far more than any other country in the world.
As previously assessed by global consulting firm IHS Markit, such “stunning level of growth will comprise more than 60-percent of net global production growth during that timeframe.”
With higher oil output being injected by the US into the export market, this is eyed as calming the jitters of immediate price spikes which could then spare heavily importing countries from near-term financial setbacks.