The Tribune

By NEIL HARTNELL

TRIBUNE Business Editor

nhartnell@tribunemedia.net

FOCOL Holdings’ chairman yesterday said households, businesses and the wider Bahamian economy have “just got to ride out” the latest global oil spike to more than $100 per barrel with industry figures asserting continued volatility makes it impossible to predict future prices.

Sir Franklyn, the largest shareholder in the BISX-listed petroleum products supplier, which operates under the Shell brand, told Tribune Business that “we should all be concerned” after oil prices shot up over $100 per barrel on the Brent Crude index after the conflict between the US and Iran escalated.

The latest jump came amid fears that Iran’s Yemen-based Houthi allies will block Saudi oil exports via the Red Sea, choking off a second critical shipping artery alongside the Strait of Hormuz, and Sir Franklyn said most - if not all - Bahamians understand that such price volatility and spikes will negatively impact this nation due to its status as a commodity that no sector of the economy can do without.

Fuel pump prices, as well as electricity, food, freight and transportation, are among the key segments that will be affected, and Sir Franklyn told this newspaper: “It’s not a good thing. The fact of the matter is we should all be concerned. The world is concerned. Everybody is concerned. Enough has been said. Most people understand rising oil prices are not a good thing, except for the people selling the oil at the top of the supply chain.

“It’s not good, but what can we do? What can I say?” Asked which way local fuel prices are likely to move, following the latest surge in global oil prices, Sir Franklyn replied: “No one knows, no one knows. I don’t know. Nobody knows. Anybody who says they know is not telling the truth. We have just got to ride it out. That is is. It is what it is. When the war is over, and the price goes down, let’s hope it goes back to normal.”

Vasco Bastian, the Bahamas Petroleum Retailers Association’s (BPRA) vice-president, and operator of the Esso gas station at the East Street and Soldier Road junction, told this newspaper that the latest eruption of conflict in the Middle East will likely dash previous hopes that gasoline and diesel pump prices in The Bahamas would continue to fall over the rest of summer following their recent drop.

With gas prices across the three fuel brands presently ranging from a low of $6.60 to a high of $6.87, he added that Bahamian petroleum retailers would “have been out the door, out the window” due to current market volatility - with increased prices raising the cost of purchasing fuel inventory, and squeezing cash flows and overdrafts - without the increase in their fixed margins that was approved by the Davis administration in October 2024.

Declining to predict whether fuel prices will increase, and by how much, Mr Bastian said the speed and timing of when The Bahamas will feel any impact from the latest oil price spike depends on whether the three oil majors - Rubis, Shell (FOCOL) and Esso (Sol Petroleum) - have already bought their next inventories, and how long it will take before existing stocks are used up.

“It’s always bought in advance,” he explained of fuel. “The next cycle might have been purchased. There’s no telling. Once crude oil rises, there’s always an affect on prices at the pump. Hopefully it doesn’t increase further any time soon. We’d been experiencing a good last couple of weeks to a month where prices have declined. I was hoping that would continue for the rest of the summer but no one can predict what is going on in the Middle East.

“I know prices are going to go up again. When, I can’t say. It’s one of those unfortunate things, but the fact prices are going up and down, no one can tell any more. These things have a way of working their way out, and I hope and pray it doesn’t go too high.”

Mr Bastian said petroleum dealers are also negatively impacted when oil, and then gasoline and diesel prices, skyrocket because it means they have to pay more for their fuel inventory when their fixed margins limit what they can charge customers. This, in turn, raises the pressure on cash flow and overdrafts to come up with the necessary resources to cover purchase costs.

“It’s not good for us when prices go up,” he reiterated to Tribune Business. “It costs us more to buy. Thank God the Davis administration gave us a margin increase in October 2024 because, without it, only God knows where we’d be today. That was the best thing that had happened for dealers in 13-14 years. Thank God that happened.

“If it didn’t happen, trust me, I don’t know where we’d be today in this industry. Jesus Lord, with the volatility and spikes that are going on now, we would have been out the door, out the window. If crude oil prices rise, there is a high probability prices at the pump will go up. But if any wholesaler has bought in advance at a lower price, it means prices at the pump will not rise right away.

“You cannot wait to the last minute to buy crude oil,” Mr Bastian added. “It’s one of the commodities you have to stay on top of. We’re hoping and praying those guys bought in advance. I don’t want to get into predictions, but I hope oil prices just level off. If we get these issues in the Middle East under control, we should all benefit from it. If the price of oil then trends downwards, we all benefit from it. It’s just wait and see.”

Dexter Adderley, FOCOL Holdings’ president and chief executive, told Tribune Business that it usually takes between two to four weeks before oil price spikes impact Bahamian fuel costs. However, he pledged that there is “no reason to be concerned” that The Bahamas’ access to oil and fuel supplies will be impacted by the potential cutting-off of two key Middle East waterways as this nation has access to other multiple sources.

“Typically it’s anywhere between two to four weeks before it gets here,” the BISX-listed firm’s chief said of global oil price increases. “It really depends on the buying cycle of the various oil companies. I don’t have numbers readily available, but it would be a proportionate increase in the retail price” from the latest oil spike.

Dismissing any worries over possible supply and fuel shortages, Mr Adderley added: “FOCOL, because of the size and type of suppliers we have, we have global suppliers. We have not been negatively impacted from a supply standpoint due to the conflict in the Middle East. It is a positive that the supply flows from different parts of the world to keep availability relatively stable. We have no reason to be concerned at this time.”

Mr Adderley, acknowledging that cost is the main concern for Bahamian consumers, said: “I can assure you that we are doing everything possible to mitigate that and keep costs as low as possible.”

The Middle East conflict widened as Yemen’s Houthis claimed responsibility for attacks on two Saudi Arabian oil tankers using ballistic and cruise missiles as well as drones.

The Houthi militias launched the attacks, which left one vessel ablaze, after accusing the crews of violating a naval blockade imposed by the group in the Red Sea. The escalation revives the global oil crisis almost five months after Tehran’s blockade on the Strait of Hormuz triggered what many feared would be the greatest ever energy supply disruption.