The Philippines: Diokno sees fuel prices stabilizing as OPEC increases production

  • THE DECISION of major oil producers to stick with their plans to raise crude production in Feb 22 would likely bring down fuel prices, which in turn could keep inflation within target, Bangko Sentral ng Pilipinas Governor (BSP) Benjamin E. Diokno said.
  • “Unlike in 2021, where the oil industry was in deficit position (demand exceeded supply), in 2022 the industry will be in surplus position,” Mr. Diokno said.
  • A group of producers comprising the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are pushing through with a planned increase of 400,000 barrels per day for Feb 22. OPEC+ is scheduled to meet again on 2 Feb 22.
  • “The increase in production by OPEC will help temper fuel prices and enable the Philippines to dampen inflationary pressures moving forward,” Department of Finance Chief Economist Gil S. Beltran said.
  • Mr. Diokno also noted demand for aviation fuel will likely drop as international travel takes a hit from the ongoing Omicron-driven surge in coronavirus disease 2019 (COVID-19) infections worldwide.
  • Amid recent developments, the BSP chief said a hike in transport fares is “unlikely” as public transportation capacity will be raised alongside easing mobility curbs.
  • “By and large our inflation forecast will hold (threshold is USD95 a barrel for two years), hence no change in existing outlook. This does not mean that there will be no adjustment in the current accommodative monetary policy in the next two years. There might be, but it will be based on other factors, not higher oil prices,” Mr. Diokno said.

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