Oil firms urged to ensure supply amid slow OPEC output growth
THE DEPARTMENT of Energy (DoE) has called on oil companies to ensure adequate fuel supply, noting that the Organization of the Petroleum Exporting Countries (OPEC) will only be gradually increasing production despite rising demand.
“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,” Energy Secretary Alfonso G. Cusi said.
Oil companies are required to maintain a minimum inventory of petroleum products, according to Executive Order 134 signed by former President Gloria Macapagal-Arroyo. The order was implemented by the DoE via a department circular issued in 2003 requiring a minimum inventory equivalent to 15 days’ supply for petroleum products, and seven days’ supply for liquefied petroleum gas.
Refiners are required to maintain a minimum crude and petroleum products inventory good for 30 days.
The DoE’s Oil Industry Management Bureau said OPEC will only be gradually adding supply to the market, adding that it expects prices to rise as a result.
“From August to December 2021, OPEC will only be enforcing a 400,000 barrel-increase per month (but this is) expected to even out the supply-demand balance by the end of 2021,” it said.
OPEC recently met with Russia and agreed to stick to a plan for a gradual increase in oil output.
Other events which may possibly raise oil prices include “aggressive demand” in the fourth quarter which is expected to hit as much as 103 million barrels per day (mbpd) of crude oil, narrowing the margin with available supply which is currently at 103.22 mbpd. Also listed as factors are continued sanctions against Venezuela, which has removed up to two million barrels of crude oil per day from the market.
This week, oil companies imposed an increase in pump prices of P1.45 per liter (/L) for gasoline, and an increase of P2.05/L for both diesel and kerosene.
“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,” Mr. Cusi said. — Angelica Y. Yang