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Overseas news
Oil prices continued to rise after US President Donald Trump warned Iran over its plans to charge fees for oil tankers passing through the Strait of Hormuz.
This coincided with renewed Israeli airstrikes against Lebanon, fueling concerns that the 2-week ceasefire deal may be in trouble.
The ceasefire agreement announced Tuesday was reportedly assisted by Chinese President Xi Jinping, leveraging China’s economic ties to convince Iran to de-escalate after the US issued ultimatums.
Meanwhile, Saudi Arabia confirmed a large drop in oil production and export capacity after drone strikes hit the East-West pipeline, a vital alternative to the Strait of Hormuz.
In February, US-Israel strikes prompted Iran to shut the Strait of Hormuz, a key oil transit point. Part of the ceasefire deal is to reopen this passageway.
Local developments
S&P Global Ratings lowered the Philippines’ credit outlook from positive to stable. This was due to heightened external risks, particularly the Middle East conflict’s impact on fiscal performance.
The rating agency said a “stable” outlook means the country is expected to maintain a healthy economic growth while gradually lowering the budget deficit over the next 2 years.
A budget deficit is what happens when the government spends more than it earns. It can be lessened by increasing revenue (usually through taxes) and/or cutting spending.
Additionally, Moody’s Ratings signaled that a prolonged Middle East conflict could trigger a sharp decline in cash sent home by overseas Filipino workers (OFWs).
This could impact economic growth as OFW remittances provide a crucial financial flow to the Philippines.
While the Middle East situation remains volatile, you may want to avoid making big changes to your portfolio. In the meantime, you can continue following your strategy if it still works for you.
