THE decision of the Organization of the Petroleum Exporting Countries (OPEC) to cut oil output and the depreciation of the peso against the dollar may lead to higher pump prices, Energy Secretary Alfonso Cusi said Thursday.
Crude oil prices surged on Wednesday after OPEC members and major oil producer Russia agreed to cut oil production by almost 1.8 million barrels per day or about two percent of global output to prop up oil prices.
“The peso depreciation definitely could cause an effect and can induce price increase,” Cusi said in an interview.
“Because of the supply cut from Russia, it affects the supply-demand and we buy in US dollars. It will have an effect because our market is deregulated. We are just reacting to what is happening in the world market. In this market, we dance to the tune of the music they play,” he said.
The government encouraged the private sector to build its own strategic oil reserve.
But Eastern Petroleum chairman and Chief Executive Officer Fernando L. Martinez said it is too early to speculate because non-OPEC oil producing countries like the US can also influence global prices.
“Also to be reckoned with is the growth of China if its oil appetite is still on decline. But all things being equal, the production cut tends to increase global prices,” Martinez said.