The Department of Energy (DOE) wants oil companies to keep a steady supply of their fuel products amid a possible supply deficit in the fourth quarter.
Energy Secretary Alfonso G. Cusi reminded oil firms to comply with Executive Order (EO) 134 which requires oil companies and bulk suppliers to maintain a sufficient minimum inventory of petroleum.
EO 134 indicated that the fuel inventory must be “in the amount sufficient to ensure a continuous, adequate and stable supply of petroleum products, should domestic and international events, such as, but not limited to terrorist attacks, armed conflicts in the Middle East and in other regions whence the Philippines draws or secures its petroleum supply, threaten or restrict the supply of petroleum to the Philippines.”
“I am directing all oil companies in the country to ensure adequate supply, and come up with plans to mitigate possible price hikes of oil products in the coming months,” Cusi said.
He reminded oil firms to comply with the Minimum Inventory Requirements (MIR) under Department Circular No. 2003-01-001.
The circular states that all oil companies, except refiners operating in the country, and bulk suppliers maintain a minimum inventory equivalent to 15-days worth of petroleum products’ supply, except for liquefied petroleum gas (LPG).
Oil refiners are required to maintain an MIR equivalent to 30-days worth of supply, consisting of petroleum crude oil and refined petroleum products.
Also a 7-day’s worth of supply must be maintained for LPG.
Pump prices went up again for the sixth consecutive week. Oil firms increased gasoline prices by P1.45 per liter, diesel by P2.05 per liter and kerosene by P2.05 per liter effective October 5.
The latest price increase resulted in year-to-date adjustments to stand at a total net increase of P16.55 per liter for gasoline, P15 per liter for diesel, and P12.7 per liter for kerosene.
According to the DOE-Oil Industry Management Bureau (DOE-OIMB), the latest global oil market developments are responsible for looming oil price increases.
Demand in the fourth quarter is seen to reach as much as 103 million barrels of crude oil per day (mbpd), while supply is currently only at about 103.22 mbpd, the DOE said.
Also, the absence of any additional supply from the Organization of the Petroleum Exporting Countries (OPEC) would contribute to supply deficit.
From August to December 2021, OPEC will be enforcing an increase of only 400,000 barrels per month which is expected to even out the supply-demand balance by the end of 2021. The DOE also said a potential deal with Iran has not progressed under the Biden administration. The continued sanctions against Iran remove as much as two to three million barrels of crude oil per day from the world market. The Iran deal is foreseen to be resolved sometime in the second quarter of 2022.
The continued sanctions against Venezuela take away a potential supply of about one to two million barrels of crude oil supply per day from the global market.
“The DOE will continue to closely monitor global oil supply and price movements. As always, we are working with the downstream oil industry players to ensure that all mechanisms to protect our consumers against the impact of such developments as much as possible,” Cusi said.