WORLD OIL PRICES (For January 2-6, 2012 trading days) 

Oil prices rose higher in the first trading week of 2012 driven by heightened concerns over Iran's threat to close the Strait of Hormuz,the strategic waterway where one-sixth of the world's oil pass daily, should economic sanctions limit, or cut off, Iranian Oil exports. While prices had marginal decrease last Friday, averages for the week remained higher than in previous week by about US$3 for Dubai crude, more than US$6 for gasoline and nearly US$5 for diesel.The European Union (EU) move to impose an oil embargo on Iran is intended to pressure the country to halt its alleged nuclear weapons program. European diplomat said there was already a consensus that the ban on crude imports would be applied, but that there was still debate on the timing and duration of the measures. About 15% of Iran's oil exports go to Europe. The EU action comes after President Obama sanctioned Iran's central bank last month in an attempt to restrict Iran's oil exports. Analysts however noted that despite the initial 2% rise in oil prices, oil markets ultimately did not react significantly to the Iranian threat. Specifically, oil analyst Thorbjoern bak Jensen of Global Risk Management concluded that "they cannot stop the flow for a longer period due to the amount of U.S. hardware in the area". Moreover, the Strait is about 55 – 95 kilometers wide and its narrowest is 54 kilometers, wide enough to be completely blocked.

Furthermore, the fact that Saudi Arabia can compensate more than 2 million b/d of Iran oil exports also balance the market.European debt jitters and unexpected increase in US crude stockpiles, also weigh prices down, given the raising concerns about demand. The US Department of Energy said Thursday that US crude oil reserves jumped 2.2 million barrels in the week ending December 30 that confounded market expectations for a drop of 900,000 barrels, according to analysts polled by Dow Jones Newswires, and indicated weaker energy demand in the world's biggest oil-consuming nation. "As 2012 dawns, market watchers said that the main event to heed on the demand side is the developing situation in Europe and whether or not policymakers there will come to some agreement on how to deal with their sovereign debt overhang. On the supply side, geopolitical events could drive direction, with Iran and potential sanctions on the country from the U.S. and Europe at the top of the list" Forbes' 2012 Outlook noted.

FOREX: The week-on-week average of the peso depreciated against the US dollar by P0.09, from P43.78 two weeks ago to P43.86 P last week.

Other recommended reference sites:(1) http://www.aip.com.au/pricing (2) http://www.med.govt.nz/ers/oil_pet/prices/prices.html

DOMESTIC OIL PRICES

On 4 January 2011, the oil companies increased their prices of gasoline by P0.90/li, diesel by P0.30/li, and kerosene by P0.20/li. The net increase of gasoline and diesel in 2011stood at P4.68/liter and P6.09/liter, respectively.

As monitored, shown below are the retail prices in Metro Manila beginning 4 January 2012.

For more information, call the 
Department of Energy: 
Pricing: 840-2187 
LPG: 840-2130 
Fuels: 840-5669

SMS: (0915) 4469421
Email: oilmonitor@doe.gov.ph
Website: http://www.doe.gov.ph