Inbizzy, Manila — Diesel prices in the Philippines have risen above gasoline, driven by tight global and regional supply, increasing demand, and geopolitical tensions. The price hikes are having a direct impact on sectors reliant on cargo transportation and logistics, potentially fueling inflation due to rising distribution costs.
Diesel Up, Gasoline Down
Diesel prices are expected to increase by Php0.40 to Php0.60 per liter, while gasoline prices may drop by Php0.10 to Php0.30 per liter. These adjustments are based on international trading data and fluctuations in the peso against the US dollar.
“The price adjustments were attributed to tight supply and strong demand for diesel in Southeast Asia, as well as the depreciation of the peso against the US dollar,” PNA reported.
Global and Regional Factors Behind the Price Hike
1. Supply Disruptions from Asian Refineries
Refineries in key Asian countries such as China, India, and Singapore have experienced operational disruptions in recent months due to scheduled maintenance turnarounds, delayed crude deliveries, or capacity constraints caused by demand outpacing production.
These disruptions have affected middle distillate production like diesel, limiting supply for both domestic consumption and exports—tightening availability across Southeast Asia, including the Philippines.
2. Decline in Diesel Exports from Major Producers
Key global diesel producers—Russia, the United States, and Saudi Arabia—have reduced exports due to multiple factors:
- Russia is grappling with international sanctions and logistical challenges amid the Ukraine conflict.
- The U.S. is holding back exports to ensure domestic supply and control inflation.
- Saudi Arabia and other OPEC+ nations are strategically adjusting crude output to maintain high oil prices, indirectly affecting refined product exports like diesel.
As a result, available diesel supply in international markets has shrunk significantly.
3. Rising Demand from Shipping, Transport, and Power Sectors
Economic recovery and e-commerce growth post-pandemic have driven increased diesel consumption in:
- The logistics and freight sector, which relies heavily on diesel-powered trucks and cargo vehicles.
- Public and commercial transportation, such as buses and long-haul trucking.
- Diesel-powered electricity generation, especially in off-grid areas or during peak demand.
This added pressure is worsening supply constraints.
4. Impact of Red Sea Conflict and Russian Export Limits
The Red Sea is a critical maritime route for oil and refined products from the Middle East to Europe and Asia. Houthi rebel attacks on tankers in the area have forced shipping companies to divert vessels around the Cape of Good Hope, increasing both travel time and transportation costs.
Meanwhile, Russia—one of the world’s top diesel exporters—is subject to export restrictions due to sanctions, resulting in significantly reduced diesel shipments to Asia.
5. Geopolitical Turmoil: Middle East Conflicts and Energy Route Disruptions
Escalating tensions in Gaza, Lebanon, Iran, and Syria have threatened regional energy logistics. In response:
- Refineries and port operators are curbing export operations due to security risks.
- Insurers are increasing premiums for tankers navigating high-risk zones.
- Countries are prioritizing domestic energy reserves to mitigate supply shocks.
These developments are tightening global supply and raising diesel prices across markets, including the Philippines, which imports most of its fuel needs.
No Special Subsidy for Diesel
The Philippine government does not apply separate subsidies for diesel and gasoline. Domestic fuel prices follow international market trends, particularly referencing the Mean of Platts Singapore (MOPS) benchmark.
Without direct price intervention, the burden falls on consumers—especially those in logistics, business operations, and public transportation.
Consumption Patterns Differ
Diesel is widely used in commercial and public service vehicles, resulting in stable demand. In contrast, gasoline consumption tends to decline when private vehicle use drops or as hybrid and electric vehicle adoption increases
