Motorists in the Philippines will experience a substantial increase in petroleum prices starting Tuesday, May 20, 2025. Oil companies, including Shell Pilipinas and Seaoil, announced an increase of P1.70 per liter for diesel, while prices for gasoline and kerosene will rise by P1.20 per liter.

Other oil firms, such as Petro Gazz, Cleanfuel, and PTT Philippines, are expected to implement similar price adjustments, with the exception of kerosene, which they do not stock.

The Department of Energy's Oil Industry Management Bureau (DOE-OIMB) Assistant Director, Rodela Romero, linked these price increases to geopolitical developments, notably the agreement between the United States and China to reduce tariffs on numerous imported goods during a 90-day pause.

Additionally, U.S. sanctions imposed on almost two dozen companies involved in Iran's oil trade have contributed to the rising prices.

The Organization of the Petroleum Exporting Countries (OPEC) has also suggested that expectations for oil supply growth in 2025 may be slower, alongside a reduction in capital spending, following a decline in global oil prices.

In parallel to the rising fuel prices, the Philippines recorded a significant balance of payments (BOP) deficit of $2.6 billion in April 2025, attributed largely to a growing trade deficit.

This figure represents a sharp increase from the $639 million deficit posted in April 2024, marking a year-on-year increase of over 300%.

The cumulative BOP deficit from January to April 2025 has reached $5.5 billion, indicating a widening trend compared to the $401 million shortfall during the same period last year.

The Bangko Sentral ng Pilipinas (BSP) noted that the BOP deficit reflects government withdrawals from foreign currency reserves to meet external debt obligations and various expenditures.

The country's trade gap has also increased, totaling $12.7 billion in the first quarter of 2025, up from $11.3 billion in the same period a year prior.

Moreover, the Philippines expects a potential one- to two-week shortage of chicken supply following a poultry import ban on Brazil due to a bird flu outbreak there.

Agriculture Secretary Francisco Tiu Laurel stated that the ban applies to all exports from Brazil, necessitating a search for alternative suppliers, which may incur higher costs despite the local poultry industry's production capabilities.

Current prices for whole chicken in leading wet markets in Metro Manila range from P170 to P230.

As the situation unfolds, the combination of rising fuel costs and widening trade deficits presents significant challenges for the Philippine economy amid ongoing geopolitical uncertainties.