LAST week, United States President Donald Trump gave Iran 48 hours to have a “complete, immediate, and safe opening of the Strait of Hormuz” or face the obliteration of its “whole civilization.” Then, just before the deadline expired, Trump announced that he had agreed to a two-week ceasefire, subject to Iran agreeing to his foremost condition.
Geopolitical observers, however, are skeptical about the announcement because Iran had a 10-point proposal the US had earlier declared as “maximalist” — that is, having impossible conditions. They say what we now have for 14 days is a “fragile peace.” A mere pause in hostilities, if at all, considering the incidents and statements following the declaration of the truce.
A few hours after Trump’s announcement, Israel launched another attack against the Iran-backed militant group Hezbollah in Lebanon, saying its northern neighbor was excluded from the area covered by this weekend’s US-Iran peace talks. Tehran protested the attack and took the occasion to reiterate its unwavering support for the anti-Israel and anti-Western-influence group.
Infidelity to ‘agreed’ conditions
Part of Iran’s 10-point proposal, set as a condition before sitting on a table with the US for peace talks, is the total pullout of all American forces in the Middle East. This was not met, as Trump declared that all US troops shall “remain in place.” He ordered that US ships, aircraft and personnel shall be around Iran until a final, “real agreement” is reached.
At the same time, Tehran ignored Washington’s demand for the forthwith and unqualified reopening of the Strait of Hormuz, that vital waterway through which 20 percent of the world’s oil requirements pass. But Iran only allowed conditional passage, and only through specific routes in coordination with its military. Recent news reports place the transit of ships in the strait at 95 percent below prewar traffic.
Iran earlier announced that passage through that narrow waterway would no longer be free. It would be subject to toll in the same way Egypt levies payments from $200,000 to $700,000 per vessel to as much as $1 million for massive fuel tankers voyaging through the Suez Canal. And we know how this translates to global fuel costs.
Why this matters to PH
Trump’s truce announcement caused crude prices to immediately drop to $15 to over $20 per barrel. This was the same market reaction in March, when he announced the postponement of airstrikes on Iran’s energy infrastructure.
Local fuel industry players predict, based on the Mean of Platts Singapore, that price reductions in the global oil market may trigger a P6/liter rollback for diesel, P1/liter for gasoline and P5/liter for kerosene.
Another round of price decreases in the global oil market by the second week is likely, depending on how the ceasefire goes. While this would be welcome, it may not be entirely favorable for Filipinos seeking tax relief. President Ferdinand Marcos Jr., given his hesitancy despite being empowered under the law, may just cite falling oil prices in the global market in setting aside reducing or suspending the excise tax on fuel products. We hope we’re wrong, but his previous vacillations on the issue fuel our apprehension.
And if, by God’s grace, the war in the Middle East finally comes to a peaceful end, we should pray that the return to normalcy does not lull us — or our government — to complacency.
Paradigm shift
We also pray that it would not be “happy days are here again” for our political leaders and leave to fate our country’s energy and fuel security again.
Indeed, we were not party to the US-Israel coalition in the war against Iran. We were also not part of Russia’s initial invasion of Ukraine in 2014 and in the larger one launched in 2022. But the disruptions these conflicts caused in the global fuel supply hit us worse than they did in other countries. Department of Energy estimates place our domestic supply requirements from the Middle East at 98 percent, making us severely vulnerable to disruptions in supply from that region.
In the face of the serious challenges caused by our decades-old reliance on fossil fuels, we have promising opportunities toward transitioning to clean and renewable energy (RE).
The Philippines has positioned itself among the top RE destinations in the world. Per DOE circular issued on Dec 8, 2022, full foreign equity is allowed for solar, wind, and tidal energy projects that were reclassified as non-natural resources.
We have harnessed our geothermal power and hydropower production. We have biomass, solar and wind power. Why not focus on the potential for energy security that our geographic location affords us? These will not only reduce our reliance on imported coal and oil, as well as our carbon footprint, but will also stabilize energy prices and create jobs.
But these opportunities are not without challenges. We are confronted with infrastructure limitations, high initial investment costs, and red tape. But with political will, especially on the matter of graft and corruption, we can encourage private-sector investments, both domestic and foreign.
But if our government leaders’ preoccupation will be on advancing their political interests the way they do, and if they will be sugarcoating social issues and redefining energy and economic crises to suit their political ends, we will remain a country of prolonged inaction and missed opportunities.
We had enough of crises. What we need are leaders who are beyond the politics of rhetoric, who place national interest above personal considerations, and are resolute in their decisions.
It is in this critical time, when choices are difficult and complex, when the consequences of mistakes are dire, that we need a strong leader. As one Coast Guard admiral said: “Smooth seas do not make a skillful sailor.”
atty.edarevalo@gmail.com
