The price of Ecuadorian crude was placed at levels of $80.95 a barrel on January 31, 2022. This, in the midst of a rebound in the international price of crude fueled by problems of geopolitical conflicts, winter and the ups and downs of the behavior of the coronavirus at a planetary level.
The last Ecuadorian price quoted above does not include the last sale made by Ecuador (which achieved a differential of -$2.95), so the price of Ecuadorian crude is expected to rise even more, almost reaching the barrier of $90 a barrel.
In accordance with José Xavier Orellana, oil expert, the factors that have supported the increase in crude oil at the international level these days have been, on the one hand, the uncertainty due to the conflict in Ukraine against Russia. A greater recovery in demand can also be seen, taking into account that the omicron strain of coronavirus does not appear to be as strong as expected.
In any case, the price of intermediate oil from Texas (WTI), which is the price marker for Ecuador, opened this Monday with a decrease of 0.56% and stood at $ 91.79. It remains the highest price in the last seven years after seven weeks on the rise, pressured by the increasing demand stemming from the recovery and limited supply. This day the market has opted for prudence after the lifting of some sanctions imposed against Iran by Washington and the resumption of nuclear negotiations.
But also there are clues that this international price could go as high as $100. According to Orellana, the demand will increase, it is expected that international travel is growing, since now they are still lagging behind; a drop in supply is also seen, since it has not been so easy to increase production. The very cold winter is another factor that put pressure on demand, but the supply that could be covered with shale oil is not so immediately viable either, since investment in this field has been reduced in the face of more environmentalist policies of the Biden administration.
The price increase for Ecuador is positive, on the one hand, since these resources are expected to go to the budget and also to the state oil company for its investments. Another issue in favor of the country is that the upward trend in crude oil also establishes a downward trend in country risk. Indeed, an oscillating trend has been seen, but to the downside. Thus, while on January 18, 2022 it had been placed at 868 points, as of February 4 it was at 768 points. That index is still high, as there are other factors that push it upwards, such as restrictions on the exploitation of crude oil and lawsuits against the Economic Development Law, which could affect resources for the treasury.
A third factor that affects the economic issue of the country is the weight of subsidies. The higher the price of crude oil and fuel, the greater the subsidy paid by the State, especially after it was decided to freeze prices in the face of social pressure.
About this themeOswaldo Erazo, president of the Chamber of Petroleum Derivatives Distributors (Camddepe), He says that due to the current circumstances: problems of imbalance between supply and demand, geopolitical problems, the weather, high prices will remain, at least in the current semester. This will give the treasury greater liquidity. He reflects that although the prices of derivatives also rise, there is always a difference in favor of the State.
Meanwhile, according to Erazo, the free importation of fuels through private companies is advancing gradually. He explains that a step in his favor is having lowered the 4.5% tax on foreign currency outflows (ISD). A second issue that pays is the signing of an agreement between Petroecuador and a consortium of companies that are willing to import derivatives and that together represent 37% of the fuel market. He expresses that the importation in the current circumstances may be on super gasoline, which is the only one that is released in its price. This fuel would continue to rise in price in the following months as well, due to price dynamics at the international level. (I)
Source: Eluniverso
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