AN escalation of tension between the US and Iraq would affect the agricultural sector and other industries in Mindanao that are dependent on oil, a Mindanao-based business leader said.
Antonio Peralta, executive director of the European Chamber of Commerce of the Philippines-Southern Mindanao Business Council, said prices of oil-based products, including fertilizers, are expected to shoot up as a result of the US-Iran friction.
The tension stemmed from the assassination of top Iranian general Qassem Soleimani on orders of US President Donald Trump.
Iran retaliated by firing ballistic missiles at two American military bases in Iraq but subsequently said it has concluded its “proportionate” retaliatory attack, a move welcomed by the US that saw the pronouncement as a move towards de-escalation.
“Perhaps, there will be a much more expensive cost to us for oil-based products, one of them is fertilizers which then again will impact on our agricultural activities. Fertilizers will be much more expensive since that is oil-based product,” said Peralta in Davao.
Other industries relying heavily on oil would also bear the burden of higher oil prices, he said.
“Looking at the prices oil, for instance, before the attacks, it was already $70 per barrel. The likelihood of that increasing, I don’t know by how much but I heard it will increase,” he said.
He said tensions might make it difficult to ship supplies of fuel out of the oil-rich countries in the Middle East since oil tankers pass through the Strait of Hormuz, a sea boundary shared by Iran and Iraq.
“If you look at the map of the Middle East, the oil coming from oil producing countries passed through the Strait of Hormuz, which is a sea boundary between Iran and Iraq. As you see these things, it will only take for Iran to say ‘we will not allow any vessels to go to the western ports,’” he said.
He added the increase in the prices of oil affects “everybody else.”
Peralta added he is confident the government could still work out measures to stave off the impact of rising oil prices on the domestic economy, particularly that of Mindanao.
“I am still confident government is able to work out on this. You can see from our foreign policies, we manage to maintain relationship and good position and we maintain a good position as we are not in a difficult situation with any of these countries,” he said.
John Carlo Tria, president of the Davao City Chamber of Commerce and Industry Inc., said he hoped the tensions would be resolved “sooner rather than later because” because the conflict would affect the overseas Filipino workers there and raise oil prices.
“In the Middle East, we are still monitoring the effect in terms of the local economy. But we hope that it will be resolved sooner rather than later because of the effect on our OFWs and there is a risk it might affect oil prices but we’re still not seeing that effect,” he added.
He said any large-scale conflict would have an impact on trade. (Antonio Colina IV, Mindanews)
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