Hormuz access secures PHL fuel flows, not prices

By Sheldeen Joy Talavera and Chloe Mari A. Hufana, Reporters

THE PHILIPPINES’ access to safe passage through the Strait of Hormuz reduces the risk of fuel supply disruption but would not immediately lower pump prices, Energy Secretary Sharon S. Garin said, as oil prices remain driven by geopolitics and global trading conditions.

The arrangement helps protect deliveries routed through one of the world’s most important oil chokepoints but does not change the factors that determine domestic fuel prices, she pointed out.

“This development will not immediately bring down fuel prices, nor does it resolve our long-term structural challenges in energy,” she said in a Facebook post late on Saturday. “What this does is help ensure continuity of supply and stability, especially at a time when further disruptions could significantly affect our economy and our people.”

Ms. Garin said the government pursued the arrangement as a risk‑mitigation measure amid escalating war in the Middle East.

The Strait of Hormuz connects the Persian Gulf to the Arabian Sea and handles a significant share of global crude exports. Shipping disruptions there have historically triggered price spikes, particularly for fuel‑importing economies such as the Philippines.

The Department of Foreign Affairs last week said Iran had agreed to allow Philippine‑flagged vessels to transit the waterway following diplomacy between officials. The announcement came as conflict involving the US, Israel and Iran disrupted regional shipping and tightened oil markets.

Energy analysts said the assurance improves logistical certainty but does not override pricing mechanisms set by global benchmarks.

“This is a step in the right direction,” Noel M. Baga, co‑convenor of the Center for Energy Research and Policy, told BusinessWorld. “But for it to affect pump prices, the assurance needs to be formalized in writing, the scope clarified and the logistics worked through.”

Mr. Baga said most Philippine fuel imports arrive on foreign‑flagged tankers under long‑term supply contracts, limiting the immediate effect of Iran’s commitment. He said the government should pursue parallel steps such as reinforcing strategic fuel stockpiles and diversifying sourcing routes.

“Imposing price controls on oil, reinforcing strategic reserves and diversifying energy supply sources remain just as important,” he added.

Jose M. Layug, a former Energy undersecretary and executive board member of the Philippine Energy Research & Policy Institute, said market pricing would remain volatile as long as conflict persists.

“The best long-term solution for the Philippines is still to reduce reliance on oil,” he said in an interview.

Oil companies said the Hormuz assurance lowers delivery risk but provides little protection from international price swings.

Top Line Business Development Corp. Senior Vice‑President and Chief Operating Officer Brigitte Carmel C. Lim said the move supports supply security. “This doesn’t automatically mean lower pump prices, since prices are still driven by global market conditions, and volatility may continue due to ongoing geopolitical tensions,” she said in a Viber message.

Jetti Petroleum, Inc. President Leo P. Bellas said the agreement could reduce some risk premiums but warned that prices would stay high absent broader de‑escalation. “Prices will continue to remain elevated until more signals of de-escalation are seen by the market,” he said.

Industry projections show diesel prices facing another increase, with gasoline also set for further hikes. Diesel prices could reach as high as P170 per liter, while gasoline may rise to about P119 per liter if trends continue.

‘WARM AND OPEN’
Analysts said the Hormuz arrangement underscores the Philippines’ vulnerability as a near‑total fuel importer.

Josue Raphael J. Cortez, a diplomacy lecturer at De La Salle-College of St. Benilde, said Manila should treat the agreement as a tactical gain rather than a solution. “It is still in our best interest to strengthen ties with traditional partners while building relationships with other suppliers,” he said via Facebook Messenger.

The Philippines imports about 98% of its petroleum, much of it from the Middle East. Rising fuel prices have strained household budgets and raised inflation concerns since fighting intensified in late February.

President Ferdinand R. Marcos, Jr. earlier said the government has pursued deals with nontraditional suppliers, including Russia, Japan and South Korea. A shipment of more than 700,000 barrels of Russian crude arrived in the Philippines late last month.

Foreign Affairs Secretary Ma. Theresa P. Lazaro and Ms. Garin met Iranian Ambassador Yousef Esmaeilzadeh last week to discuss energy cooperation. “We are committed to deepening cooperation across all fronts, particularly on energy,” Ms. Lazaro said.

Palace Press Officer Clarissa A. Castro said the meeting was “warm and open,” adding that Iran expressed readiness to help.

The Philippines remains under a one‑year state of energy emergency as supply risks persist. Mr. Marcos formed an inter‑agency committee to manage responses, while fuel and cash subsidies for transport workers and low‑income households began rolling out nationwide.

Analysts said emergency measures soften the shock but fail to address structural weaknesses.

Anthony Lawrence A. Borja, an associate professor of political science at De La Salle University, said Congress should prioritize legislation that strengthens long‑term energy resilience. “Legislation that paves the way for the long-term security of the country is more politically expensive than knee-jerk reactions that could be left to the Executive branch,” he said in a Messenger chat.

Congress resumes session on May 4 after a six‑week recess.

University of Santo Tomas Political Science Department Chairman Dennis C. Coronacion said lawmakers should examine measures promoting renewable energy adoption and review tax relief mechanisms.

President Marcos signed Republic Act No. 12316, authorizing him to suspend or cut excise taxes on petroleum products during emergencies. Analysts said decisive use of that authority would shape near‑term relief.