The conflict between Russia and Ukraine is already having economic consequences worldwide.
This Thursday, the price of oil reached its maximum value in seven years for fear that the crisis will interrupt the overall supply. The barrel of Brent, an international benchmark, reached US$142,04.
The increase occurred after the Russian president, Vladimir Putin, announced a “special military operation” in the Donbas region, in eastern Ukraine, where the two rebel territories are located pro-Russian Donetsk and Luhansk.
But bombs and explosions reported in various cities of the country, beyond the territories of eastern Ukraine cited by the Russian president.
The strong rise is also explained by the sanctions that the United States, the United Kingdom and the European Union have been imposed on Russia in recent days. The West has indicated that they are preparing “tougher” sanctions, which could eventually affect the supply of crude oil from this country.
Among the possible measures, countries and companies could be prohibited from buying oil from Russian energy giants such as Gazprom or Rosneft.
Russia is a key player in oil production: it is the second largest exporter after Saudi Arabia.
“Russia distributes 1 of every 10 barrels of oil consumed worldwide (…). It can really harm consumers at gas stations”, Maike Currie, director of investments at Fidelity International and columnist for the Financial Times, explains to the BBC.
But what are the effects of this escalation of crude oil prices in Latin America?
Oil producers
The increase in the price of oil threatens to further increase the “economic slowdown” that is being experienced in much of the world after the pandemic.
And Latin America is no exception: several countries in the region are already seeing serious impacts on their growth prospects and an increase in inflation.
“A higher oil price is going to have implications both on the of supply and demand. There are very limited shipments of Russian crude oil to the Latin American region, but obviously any disruption in the global supply has an impact on the rest of the crude oils”, Ixchel Castro, manager for Latin America of Oil and Refining Markets of the consulting firm, explains to BBC Mundo. Wood-Mackenzie.
But what about the countries that are oil producers?
That the price of oil rises is not necessarily good news for all oil producers. crude oil from Latin America.
Brazil and Mexico are the main producers on the continent, while Venezuela, Ecuador, Colombia and Argentina also produce, although to a lesser extent.
“For them, it is good that the price rises per or in reality it is not so much”, Fernando Valle, senior oil and gas analyst at Bloomberg Intelligence in New York, tells BBC Mundo.
“Because although it is not positive to have a very low price , when it rises above US$80 the barrel is a very big problem due to price inflation for the consumer”.
“As much as companies states like Petrobras (Brazil) or Pemex (Mexico) have more money, it is not enough to be able 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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In view of the above, it is important to bear in mind that many producing countries need also 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 continues to have the raw material but not the refinery capacity it needs to supply its domestic demand. And, therefore, it continues to matter”, explains Castro.
Thus, the rise in the barrel can have mixed effects.
But, looking at the future, Ixchel Castro believes that the fact that today there are prices close to US$80 per barrel is an acknowledgment that the world is still short of crude.
“And there the great advantage is that, if we look at the areas of growth in crude oil supply at a global level, 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 only importers, such as this is the case of Chile or Peru.
“It’s a problem because everything is more expensive”, says Fernando Valle.
“Energy is the basis for everything, so when you raise that price, the price of exports also rises”, he adds.
As the English consulting firm Capital Economics warned a few days ago, it is 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 continue to be importers of crude oil and they are going to see an impact of higher prices for their consumers”, says Ixchel Castro.
“A sustained impact on these prices, without any type of government intervention, can impact not only the price of fuel but the entire value chain , which are food, raw materials, etc”, he adds.
The expert assures that this can delay the recovery of the post-pandemic economy and the return to operation of the productive chains that have been affected in the last two years.
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