The Market Monitor Minding the Nation's Business
By Tracy Cabrera
Business leaders are raising alarms over the renewed conflict in the Middle East, warning that escalating tensions could ripple through the Philippine economy through higher fuel costs, supply disruptions, and risks to overseas Filipino workers (OFWs).
Industry groups said the country’s heavy dependence on imported oil makes it particularly vulnerable if global crude prices continue to surge following recent American and Israeli attacks on Iran.
According to Mitsubishi UFJ Financial Group (MUFG), the Philippines is among the most exposed economies in Asia due to its reliance on imported energy. The banking giant warned that sustained high oil prices could strain the country’s external accounts and drive up inflation.
Responding to the developments, the Department of Energy (DOE) said it is considering staggered increases in domestic fuel prices beginning next week if the “conflict (in the Middle East) does not de-escalate.”
Business leaders said the fallout could quickly spread beyond fuel prices.
Robert Young, president of the Foreign Buyers Association of the Philippines, warned that escalating tensions could disrupt global supply chains and affect Philippine exports.
Meanwhile, Perry Ferrer, president of the Philippine Chamber of Commerce and Industry (PCCI), said the crisis would “certainly impact the Philippines directly.”
Young and Ferrer both agreed that rising fuel costs could push commodity prices higher and increase the cost of imports “unless [an] agreement is reached within the week.”
In a statement, the PCCI urged the administration of Ferdinand Marcos Jr. to diversify the country’s oil sources.
“Our country sources 100 percent of its crude oil imports from the Middle East. With oil prices surging amid fears of disruption in the Strait of Hormuz, we call on the government to urgently explore and secure alternative sources of fuel supply to reduce our dependence on a single region,” the group said.
The chamber also called on authorities to stabilize fuel prices, ensure adequate supply of basic goods, and use monetary tools to protect the peso from further volatility.
At the same time, PCCI emphasized the need to protect Filipino workers in the region, whose remittances remain a major driver of domestic consumption.
“Their safety and welfare is our most immediate and non-negotiable concern,” the PCCI stressed, adding that repatriated workers must receive livelihood and reintegration assistance.
Manufacturers are also bracing for higher costs.
Elizabeth Lee, chairperson of the Federation of Philippine Industries, warned that rising energy prices could cascade into higher electricity rates and logistics expenses.
“For manufacturers dependent on imported inputs, this may translate into higher freight costs, longer transit times and more expensive raw materials,” Lee said.
MUFG also cautioned that the Philippine peso could weaken further if oil prices remain elevated.
The financial group estimated that every US$10-per-barrel increase in crude prices could weaken current account balances across Asia by about 0.2 to 0.9 percent of gross domestic product, with the Philippines among the most affected in terms of balance-of-payments exposure.
It also projected that consumer price inflation across Asian economies could rise by roughly 0.1 to 0.9 percentage point for every US$10 increase in oil prices. The Philippines, along with Thailand, Vietnam, and South Korea, may face the strongest upward pressure.
MUFG added that if crude prices approach US$90 per barrel, inflation in the Philippines could climb toward the upper end of the central bank’s target range, complicating efforts to maintain price stability.