The recent drone attacks on a huge oil facility of state-owned Aramco in Saudi Arabia increased the oil price in our country.
An oil shortage or steep rise in oil price will surely rock our economy. The “drone attacks on 2 major oil facilities of Aramco in Saudi Arabia are expected to cut the country’s output by 5.7 million barrels per day or more than 5% of the global oil supply.
The problem is, the Philippines rely heavily on imported fuel. It would have an adverse impact on the country. The government must ensure the compliance of oil companies with the minimum inventory requirement. There must be a continuous supply of fuel to the motoring public.
Following the attack in Saudi Arabia, global oil prices surged by 11% and are expected to further drive fuel prices up. Saudi Arabia is the top supplier of crude oil in the Philippines. We import 33.7% of our crude oil from this Middle East kingdom. Surging crude prices would lead to higher prices of goods and services, and a large import expense which could weaken the peso against the dollar. Oil prices would likely soar because no timeline for the restoration had been given.
Other OPEC countries and Russia can pump more oil but they don’t have enough space capacity to cover the entire shortfall.
The higher oil prices would in turn lower the income of PAL and Cebu Pacific Air by higher input cost.
Last year, the Philippines paid P707 billion for imported petroleum products up by 32% from 2017.
This attacks in Saudi Arabia affects the geo-political situation in the region and worsen relations between Iran and the United States. The United States accused Iran of an unprecedented attack on the world’s energy supply.