Solon sees lower oil prices as Doha output talks failed
A party-list solon yesterday said the failed Doha output talks will result in lower oil prices in the world market.
LPG-MA party-list Rep. Arnel Ty said oil price can go down as low as $20 per barrel because the Doha talks have collapsed.
For countries heavily-reliant on oil products like the Philippines, the botched agreement will cost savings of at least P238 billion per year.
The Doha talks is a potential pact to restrict output by 18 members and non-members of the Organization of Petroleum Exporting Countries (OPEC) but it was foiled because Iran refused to join in.
Amid a global overflow, Tehran has been ramping up oil production following the lifting of Western sanctions as part of a nuclear deal.
Since then, Iran, the second larger oil producer, is raring to grow market share and exporting up to 1.9 million barrels of oil per day.
“The huge cost-savings from cheap oil has put extra cash in the pockets of Filipino consumers, and the increase in buying power has helped stimulate demand for goods and services, this firing up the domestic economy,” Ty said.
He added that last year, the Philippines generated $5.24 billion per month or P238.43 billion in cost-savings from all the crude oil and finished petroleum products.
The Philippines spent only $7.19 billion to pay for its oil imports in 2015, down by 42 percent from the $12.43 billion it spent in 2014, according to the Department of Energy.
The country purchased oil, mainly from Saudi Arabia, Kuwait, the United Arab Emirates and Qatar, at an average cost of $60.06 per barrel in 2015 -- down 46 percent from $106.89 per barrel in 2014.
After surveying 45 countries, the global forecasting firm Oxford Economics Ltd. had predicted that the Philippines, which imports nearly all of its oil requirements, would prosper the most and its economy would grow the fastest in a low oil price setting.
“Even assuming oil does not nose-dive to $20, it is clearly not going up anytime soon, as long as the market is swamped with a big surplus,” Ty added.