He The international price of crude oil remained at a high but stable level on April 5, as a result of the latest announcements by the Organization of the Petroleum Exporting Countries (OPEC) Plus that it will cut 1.66 million barrels per day from May to the end of 2023, and expectations of a decline in crude oil inventories (reserves) in the United States.

So, WTI oil – mark Ecuador – for delivery in May 2023 was at $80.42 a barrel, down $0.29 or 0.36% from Tuesday’s close of $80.71 in New York.

In Ecuador, the news about the price increase is positive, because as a country that produces this raw material, more resources can come in and somehow compensate for the weakened oil sector. However, it is not known whether this scenario will last.

In accordance with Oswaldo Erazo, executive secretary of the Chamber of Derivatives Distributors, OPEC’s decision is the third in six months of crude oil cuts. In October, 2 million were reduced; Russia also cut 500,000 last March and now a million more by OPEC Plus. In this sense, according to Eraz, experts bet that the price will stabilize between 80 and 90 dollars.

Erazo explains that as a producing country we benefit from higher revenue from crude oil. This would help compensate for the drop in production. He says that oil production in the country is low. It is currently produced in Ecuador 463,268 barrels per day, reported the Agency for Energy Regulation (with a limit value of April 4). This figure is slightly lower than on April 3, which already amounted to 467,073. About 3000 barrels less. The decline was recorded in the Petroecuador operation, as production decreased from 376,360 to 372,287 barrels on the same dates. In both cases, oil production is below the 520,000 barrels per day expected for this 2023 year.

As for derivatives (gasoline and diesel), Erazo explains that since the country is in a fuel deficit and imports 70 percent, it will experience a significant outflow of foreign exchange. However, he believes that, overall, with the rise in crude oil prices, a positive balance will always be obtained.

Finally, for the local fuel market, It is expected that on April 12, when the revision of gasoline prices in circulation is carried out, they could fall. It won’t happen in May, it will definitely increase. The frozen fuel prices were maintained.

In accordance with Jaime Carrera, executive secretary of the Fiscal Policy Observatory, the price of crude oil, due to its volatility, no one can predict. He explains that OPEC sought to reduce production, hoping to soften the effects of a possible recession in the economy. He points out that some analysts say the price could be between $80 and $100, but that’s not certain.

As for the reality of Ecuador, it indicates that in the first quarter of this year, compared to the first quarter of 2022. about $600 million less was received. For Carrera, it is a brutal decline that weakens public finances. Let us remind you that about 3300 million dollars was planned in the budget, and in the first quarter a little more than 300 million dollars arrived.

The decline occurred due to the decline in production, but also due to the overestimation of oil revenues. In this sense, according to Carrera, in order for Ecuador to have an income of 3.3 billion dollars in the budget, with the planned production, realistically the average annual price should be 80 dollars, not 64.8 dollars. And for him, these figures mean a bigger deficit. Added to all this is the fact that less tax revenue is obtained, that the possibility of selling assets for 1,000 million dollars seems far away, and that new demands continue to be generated that do not take into account their sustainability and where they come from. they will draw on these resources, such as what is required by the Judiciary.

In the meantime, Ecuador’s country risk remains high despite rising crude oil prices. This April 4, it was at 1,908 points, above the 1,875 registered on April 3. The theoretical price of Ecuadorian crude, published by Petroecuador on March 31, was $64.13.