Red Sea ship attacks seen adding to cost of transporting oil, other goods
THE attacks on Red Sea shipping will be felt by consumers mainly in the form of higher shipping costs if the disruptions continue, the Department of Energy (DoE) said.
“Kung magpapatuloy ang issue ng Red Sea, talagang mataas ang trade costs. At the same time, may premium sa product lalo na sa insurance because of the risk in passing the Red Sea,” (If the Red Sea issues continue, trade costs will rise, mainly in the form of higher insurance premiums for ships transiting the Red Sea,) Rodela I. Romero, assistant director of the DoE Oil Industry Management Bureau, said by phone.
Ms. Rodela said tankers forced to take alternate routes will take more time to reach their destinations.
The Red Sea runs along the western shore of Saudi Arabia, one of the world’s largest oil producers. In terms of the tanker trade, the Red Sea route mainly affects shipping headed for the Suez Canal on the way to Europe. Oil coursed through the Persian Gulf to Asia avoids the Red Sea entirely.
Cargo ships and tankers crossing the Red Sea have experience attacks from Houthi rebels in Yemen. About 12% of global trade or 30% of overall global container traffic goes through its northern end — the Suez Canal.
“Though perceived risks from the Red Sea crisis are on the rise, there have been no major drops in supply so far, with container ship transits down much more than oil tankers. Oil in-transit volumes have yet to show any structural shift related to rerouting ships away from the Red Sea,” the DoE said.
Ms. Rodela said that a drop in the US oil stockpile is also influencing prices.
The Philippines imported in the first half of 2023 3,476 million liters (ML) of crude oil, up 23.7%.
“It is important for the Philippines to understand that oil remains the largest energy source in the country — even more than coal,” Albert Dalusung II, energy transition advisor of the Institute for Climate and Sustainable Cities, said in an e-mail.
“This is because of our dependence on oil for transport, an energy use that is even bigger in energy terms than the entire electricity sector,” he added.
Bienvenido S. Oplas, Jr., president of Minimal Government Thinkers, said that the Philippines should not focus on oil price fluctuations but on “raising and sustaining production of goods and services” — focus on growth.
“A rise of $5-10/barrel over 2021 level like 2023 levels won’t matter much if there is more manufacturing, transportation, agriculture, other sectoral growth,” he said in a Viber message.
On Monday, fuel retailers announced a per liter increase in the price of gasoline, diesel, and kerosene by P2.80, P1.30, and P0.45, respectively.
“The market’s primary concern at the moment is that, should the ongoing conflict in the Middle East escalates, supply flows and production could be disrupted,” Jetti Petroleum, Inc. President Leo P. Bellas said.
“The tension in the Red Sea has already affected trade flows as oil and gas tankers have diverted to a longer but safer route around Africa.”
Ms. Rodela said that the DoE’s primary mandate is to ensure the continuous supply of petroleum products in the Philippines.
“We are ensuring that the petroleum products that we buy are compliant with standards on quantity and quality — correct size, good quality,” she said. — Sheldeen Joy Talavera