Ecuadorian crude oil could reach $90 due to the effects of the global rise

The price increase generates greater income, greater import expense and also more weight in subsidies, but there is a favorable balance.

The price of Ecuadorian crude was placed in levels of$ 80.95 the barrel on January 31, 2022.This, in the midst of a rebound in the international price of crude oil due to problems ofGeopolitical conflicts, winter and the fluctuations of coronavirus behavior at the planetary level.

The last Ecuadorian price mentioned 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 barrier a barrel.

In accordance withJosé Xavier Orellana, an oil expert, the factors that have supported the increase in international crude oil these days have been, on the one hand, the uncertainty about the Ukraine conflict against Russia.There is also a greater recovery of demand, taking into account that theCORONAVIRUS EMICRON CEPAIt doesn't seem to be as strong as expected.

In any case, the price of Texas intermediate oil(WTI),which is the marker of the price of Ecuador, openedThis Monday with a 0.56 % decrease and stood at $ 91.79. It remains the highest price of the last seven years after seven weeks on the rise, pressed by the growing demand derived from recovery and limited offer. This day the market has opted for prudence after the lifting of some sanctions imposedagainst Iran for Washington and the resumption of nuclear negotiations.

But alsoThere are clues that show that this international price could reach $ 100.According to Orellana, the demand will increase, it is expected thatInternational trips are growing, since they are still lagging behind;There is also a decrease in the offer, becauseIt has not been so easy to increase production. Very cold winter is another factorsThey press the demand, but the supply that could be covered with shale oil is not so viable immediately, since the investment in this field has been reduced against 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 of crude also establishes a downward trend of the country risk. Indeed, an oscillating trend has been seen, but down.Thus, while on January 18, 2022 it had been placed at 868 points, on February 4 it was at 768 points.This index is still high, because there are other factors that presses it up such as the restrictions on the exploitation of crude oil and the demands against the Economic Development Law, which could affect the resources for the treasury.

A third factor that affects the economic issueof the country is the weight of subsidies.The higher the price of crude and fuels, the greater the subsidy paid by the State, especially after the prices of social pressures are decided.

On this subject, Oswaldo Erazo, president of the Chamber of Distributors of Petroleum Derivatives (Camddepe),He says that due to current circumstances: imbalance problems between supply and demand, geopolitical problems, climate, high prices will be maintained, at least in this semester. This will give greater liquidity to the treasury. Reflect that although derivative prices also raise, there is always a difference in favor of the State.

Meanwhile, according toErazo, the free import of fuels through private companies is advancing in a gradual way.He explains that one step in his favor is to have dropped 4.5 % of the foreign exchange tax (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 importation in current circumstances can 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, due to international price dynamics.