“A higher price on oil is going to have implications on both the supply and demand sides. There are very limited shipments of Russian crude to the Latin American region, but obviously any disruption in the global supply has an impact on the rest of the crudes,” he explains to BBC Mundo. Ixchel Castro, manager for Latin America of Petroleum and Refining Markets of the consulting firm Wood-Mackenzie.
But what about countries that are oil producers?
That the price of oil is not necessarily good news for all Latin American crude producers.
Brazil and Mexico are the main producers on the continent, while Venezuela, Ecuador, Colombia and Argentina they also produce, although to a lesser extent.
“For them, it’s good that the price goes up but in reality it’s not so good,” he tells BBC Mundo. Fernando Valle, senior oil and gas analyst at Bloomberg Intelligence in New York.
“Because although it is not positive to have a very low price, when it rises above US $ 80 a barrel it is a very big problem because of the consumer price inflation”.
“As much as state-owned companies such as Petrobras (Brazil) or Pemex (Mexico) have more money, it is not enough to reduce the impact on the consumer. And for governments it is very important that prices do not rise so much,” he adds.
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Faced with the above, it is important to bear in mind that many producing countries also need to import gasoline. This is the case of Mexico, which is forced to import gasoline from the United States because it does not have the necessary refining capacity to supply its domestic demand.
“The region still has the raw material but not the refinery capacity it needs to supply its domestic demand. And, therefore, it still matters,” Castro explains.
Thus, the rise of the barrel can have mixed effects.
But, looking to the future, Ixchel Castro believes that the fact that today there are prices close to US$100 per barrel is a recognition that the world still needs crude oil.
“And there the great advantage is that, if we look at the areas of growth of crude oil supply globally, Latin America is positioned as one of the most important regions in the next two decades,” he says.
Thus, he adds, any energy transition “should be accompanied by discoveries of new deposits and production.” And in that, Latin America could benefit.
And what about importing countries?
On the other hand, the rise in the price of a barrel is a negative phenomenon for countries that are importers only, as is the case of Chile or Peru.
Tensions between Russia and Ukraine have been rising in recent weeks. GETTY IMAGES
“It’s a problem because everything is more expensive,” says Fernando Valle.
“Energy is the basis for everything so when you raise that price it also raises the price of exports,” he adds.
As the English consultancy Capital Economics warned a few days ago, this could generate a greater tightening of the monetary policy of these countries and lead to significant inflation.
“A good part of our countries in the region are still importers of crude oil and are going to see an impact of higher prices for their consumers,” says Ixchel Castro.
“A sustained impact on these prices, without any government intervention, can impact not only the price of fuel but the entire value chain, which is food, raw materials, etc,” he adds.
The expert assures that this may delay the recovery of the post-pandemic economy and the return to the functioning of the productive chains that have been affected in the last two years.
