By Elijah Felice E. Rosales & Samuel P. Medenilla
THE country’s trade chief has warned that the brewing geopolitical tensions in the Middle East could put pressure on producers to increase their prices, as world oil rates surged on Friday after a United States strike killed an Iranian military leader and Iran vowed retaliation.
Trade Secretary Ramon M. Lopez told reporters that suppliers of basic goods have yet to petition for a new round of price hikes this year, but the escalation of the situation in Iran and Iraq, two major oil producers, could affect Philippine fuel rates and compel manufacturers to increase their prices.
Friday’s spike in oil prices following the heightened tensions after the US attack also sparked fresh calls for the Philippines to be ready to move to safety thousands of overseas Filipino workers (OFWs) in the Middle East who might be affected by the brewing new crisis.
This, as a local labor group also urged government to suspend the new round of taxes for fuels— which took effect on January 1, 2020, as part of the Tax Reform for Acceleration and Inclusion (TRAIN) Law—to “cushion” the expected surge in its prices in the international market amid the escalating tension between the United States (US) and Iran in the Middle East.
“There is no [local] increase, yet. If the conflict in Iran escalates, it will affect oil prices and that’s the uncertainty now. That’s beyond our control,” Lopez explained on Saturday.
Lopez disclosed that Cabinet officials are scheduled to meet on Monday (today) and said the issue on Iran might be discussed on the side. Either way, he said the government is positioning the country’s oil inventory to prepare should tensions in the Middle East worsen.
“Nevertheless, the preparation there and the best you can do is positioning of supply, and you can position only to a certain extent. You cannot stockpile your inventory. It’s a relief that when the Saudi facilities were bombed, prices did not skyrocket,” Lopez said, referring to the attacks in September that damaged two oil installations in Saudi Arabia.
“We were assured that we have stock, [and] we just need that kind of assurance from the other suppliers. As long as that assurance is missing, you are just like other countries vulnerable to the world oil price [changes],” the trade chief added.
Last Friday (January 3), oil prices jumped and stocks declined following the killing of Maj.Gen. Qassem Soleimani, head of the Iranian Revolutionary Guards.
The price of international benchmark Brent oil nearly touched $70 per barrel after the Pentagon reported US President Donald J. Trump authorized the air strike against Soleimani at Baghdad’s airport. Further, American benchmark West Texas Intermediate went up over 3 percent to settle at $63.05 a barrel.
The immediate price surges were among the highest since the attack on Saudi oil installations in September that temporarily erased 5 percent of the world’s oil supply.
Ayatollah Ali Khamenei, Iran’s supreme leader, vowed there will be consequences for the death of Soleimani. In a statement, he said the general’s “departure to God does not end his path or his mission, but a forceful revenge awaits the criminals who have his blood and the blood of the other martyrs last night on their hands.”
Anticipating retaliation, the US State Department called on American citizens to depart Iraq and the region immediately. It also said all consular operations of the US Embassy in Iraq has been suspended due to attacks—allegedly by Iran-backed militia attacks—on the diplomatic office’s compound. As such, it advised US citizens to stay off the embassy’s vicinity.
Suspend fuel tax
As part of the country’s options in dealing with fresh volatility in the global oil markets following the Mideast tensions, the government was urged to halt the fuel taxes to “cushion” the expected surge in global prices.
In a statement, Bukluran ng Mangga-gawang Pilipino (BMP) Chairman Leody de Guzman said President Duterte must issue an order suspending the third tranche of excise taxes on petroleum products under the TRAIN fuel tax package and the value-added tax on fuel.
“Majority of Filipinos live in poverty. Any increase in prices would be harsh, if not fatal, not only to four-tenths of our labor force that belong to the informal economy but also to those in the formal sector who are already suffering from stagnated and starvation wages,” de Guzman said.
He said Duterte should no longer wait for oil prices to exceed $80 per barrel, the threshold set by the TRAIN law for suspending excise taxes. “The President should quit dilly dallying and immediately issue an executive order that will suspend the collection of excise and value- added taxes on oil to avert inflationary impacts on commodities,” he added.
Overseas impact
Aside from its local effect, some migrant advocates also expressed concerns on the impact of the US-Iran conflict to Filipinos abroad.
The Federation of Free Workers (FFW) joined the Trade Union Congress of the Philippines (TUCP) and other members of the labor coalition, Nagkaisa, in appealing to the government to disclose its repatriation or evacuation plan for Filipinos, who might affected if the US-Iran conflict spreads to other neighboring countries in the Middle East.
Caloocan Bishop Pablo David condemned the provocative US attack, which he said may lead into another global war.
“Nobody, as in nobody, stands to gain from the assassination of Iran’s Maj. Gen. Qassem Soleiman, except the global arms dealers who need to stoke up international conflicts and instigate wars to boost up their arms industry,” David said in a statement. Balanga Bishop Ruperto Santos said he is also against the eruption of yet another war.
“War just creates destruction and death. There are no victors in war, just victims and [it could] lead to a cycle of hatred and violence,” Santos said.