Hormuz passage supports supply stability, not pricing relief
From AB Capital's The Opening Bell: Three Moves
Event
The Philippines secured safe passage through the Strait of Hormuz, reducing delivery risks for fuel imports. However, the Department of Energy (DOE) emphasized that global benchmarks still drive domestic prices, with diesel potentially reaching P170 per liter amid ongoing geopolitical tensions.
View
In our view, the development improves supply security but does not address pricing pressures. With around 98% import dependence, domestic fuel prices remain exposed to global oil dynamics, risk premiums, and shipping conditions despite logistical improvements in supply routes.
Catalyst
Key drivers include oil prices, geopolitical developments, and policy responses. If tensions persist, elevated prices could sustain inflation pressures. Partial de-escalation may reduce risk premiums, though meaningful price normalization likely requires a sustained decline in global crude benchmarks.
Action
We think the setup reinforces a cautious stance on fuel sensitive sectors. Supply risks are manageable, but pricing risks remain elevated. Favor companies with cost pass through and resilient demand, while monitoring policy execution and global oil trends as primary market drivers.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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