While the country watches the toxic Marcos–Duterte dynastic conflict shift from a Senate leadership feud to the impeachment trial of Vice President Sara Duterte, ordinary Filipinos are being quietly crushed. The Marcos Jr. administration remains paralyzed by political theater, failing to decisively cushion the nation from a devastating oil crisis triggered by Washington’s war of aggression against Iran.
The unprovoked US–Israel attack on Iran is sending economic shockwaves through the Philippines and the rest of the world. The measures the Marcos Jr. administration has taken to address these shocks must be assessed against the sheer magnitude of the problems at hand. Currently, responses are rolled out more to give the appearance of swift action than to provide general relief or genuinely transform the economy.
The global energy crisis—triggered by the 2026 US war against Iran and the subsequent blockade of the Strait of Hormuz—has hit the developing world hard. Yet, even when compared to other underdeveloped or emerging market economies, the Philippines is uniquely and exceptionally exposed.
The Philippines imports practically 100% of its crude oil requirements and relies heavily on just three West Asian countries for 96% of those imports: Saudi Arabia (49%), the UAE (28%), and Iraq (19%). Crucially, roughly 30% to 40% of these imports must pass through the Strait of Hormuz, where shipping has been largely halted due to the ongoing war.
According to the research group IBON Foundation, the persistently high fuel prices in the Philippines—now among the highest in ASEAN and a major driver of inflation—are the result of deliberate government policy choices that leave the oil industry unregulated and profit driven. Fuel prices are skyrocketing because the government has surrendered price-setting to private oil firms. While oil is not a simple commodity but a strategic input used widely across transport, manufacturing, and agriculture, the Oil Deregulation Law allows corporate entities to price it freely to maximize profits. This vulnerability is severely compounded by high fuel taxes that further amplify imported price shocks.
Despite the fact that the oil industry accounts for over 50% of the country’s final energy consumption, the government relinquished control of this strategic sector in the 1990s, bowing to full deregulation and structural adjustments pushed by the International Monetary Fund (IMF).
The consequences are clear on the ground. By the first week of April, Philippine diesel prices reached around Php160 per liter, making them the third highest in the region—surpassed only by Singapore (Php199) and Myanmar (Php166). Gasoline stood at Php107 per liter, ranking fourth behind Singapore (Php159), Myanmar (Php135), and Lao PDR (Php114). IBON noted that neighboring countries with stronger state participation and vertically integrated oil industries have successfully stabilized domestic prices to protect consumers. In contrast, the Philippines and Singapore offer minimal state intervention, leaving pump prices entirely to so-called market forces.
Furthermore, oil firms’ use of “replacement cost” pricing—setting domestic prices based on the speculative cost of acquiring new future supplies rather than what they actually paid for current stock—has insulated corporate profits while shifting the entire burden of global volatility onto consumers. This practice enabled substantial corporate windfall profits, estimated at around Php46.5 billion in March alone, or roughly Php1.5 billion daily. These gains come at the expense of 21.1 million low-income and lower-middle-class Filipino families already struggling with the cost of living.
According to the Philippine Statistics Authority (PSA), this energy-driven inflation surged to a three-year high of 7.2% in April 2026, as rising food and transport costs pushed consumer prices to the brink.
Aggravating the situation is the fact that the Philippine government imposes some of the highest taxes on petroleum products in Asia. Instead of proactively providing relief through price regulations, subsidies, caps, or strategic reserves like its neighbors, Manila penalizes its citizens with a 12% Value-Added Tax (VAT) and additional excise taxes. The Philippines’ 12% oil VAT rate leads ASEAN, outstripping Thailand (7%), Singapore (9%), and Cambodia, Laos, and Vietnam (10%).It is even higher than the consumption taxes of highly developed economies like South Korea (10%) and Japan (10%), where consumers possess vastly superior purchasing power.
Petroleum must be treated as a strategic national commodity. The Philippines must build the institutional capacity to regulate prices, establish national reserves, and deploy stabilization mechanisms that prioritize public welfare over corporate profiteering. Scrapping the highly regressive oil VAT is an urgent, immediate relief measure. However, the real challenge moving forward isn’t simply managing the symptoms of the crisis, but confronting the deeper structural flaws of a completely deregulated oil industry. Without decisive structural reforms, the country will remain perpetually at the mercy of external shocks, leaving the Filipino people to bear the brunt of every foreign war and speculative frenzy.
