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The Brent price peaked on October 3 at US $ 86.29, a level that seemed like a springboard for the biggest. Today, less than two months later, crude oil fell by 30.2% to $ 60.21. Between the two, in addition to market movements, there is a struggle between the major oil powers of the world who are trying to bring this price back to its point of profit.
The United States and the Organization of Petroleum Exporting Countries (OPEC) (and allies like Russia) are the two poles of the race and, as we have seen in recent weeks, both are reacting when oil moves away from their interests. Donald Trump spares no effort to criticize price-raising measures, while OPEC re-evaluates his actions to "stand by him".
(Read: Oil prices reduce yesterday's losses)
Why this difference of interest between the two? "In the current scenario, Trump needs low-cost oil to prevent his tax program from being cannibalized by fuel changes, and EEU is the world's largest potential producer of crude oil." If its distribution infrastructure is ready, by 2019 it will become the largest net exporter of energy, "said Guillermo Valencia, founder of Macrowise.
Similarly, the market expert, Julián Villamizar, explains that "EE. UU You need a level like the current one to continue with fracking, your investments and your profitability, and it's not so much interested in the fact that the price of gasoline generates inflation he is looking to keep it at 60 USD. What it does is increase production and reduce imports so that global supply is up and prices down. "
(Read: This is the roadmap for boosting oil tasks)
Moreover, as Villamizar points out, "much of the public spending and economic development of OPEC countries is dependent on the price of oil, so the higher the price, the more money they will have. At their disposal, however, it should be noted that they no longer control the situation so much, because they reduce their production, the EEU I would gain market share. "
Given the current decline, OPEC recently announced that it would re-implement its production reduction program to reduce global supply (which would increase the price) at its December 6 meeting. A reduction in pumping is estimated at 1.4 million barrels per day.
(Read: The oil giants, on the way to the energy future)
But Trump now has more "weapons" to deal with the situation, thanks in part to the badbadination of opposition journalist Jamal Khashoggi. According to Valencia, "the regime of Mohammed Bin Salman (MBS) in Saudi Arabia is under attack after Kashoggi's death, but Trump will defend him to keep the prices low." It should be noted that the success of the production cuts of OPEC has driven the sharp price increase since 2016 depends exclusively on coordination. But for MBS to stay in power, it will depend on Trump, which makes his incentives more aligned with energy efficiency. UU that with OPEC. "
And the results of this pressure from Donald Trump and the United States on Saudi Arabia, which is the largest producer of OPEC, are already being felt. Without going further, we learned this week that the country had the highest oil pumping in its oil history, going back more than 80 years.
What role does Latin America play in this area?
Faced with the global struggle for the price of oil, although Latin America is one of the regions most interested in its listing, because economies like that of Colombia largely depend on it, their participation in the dispute is less.
"The region depends on what EE.UU and OPEC do, so that countries like Colombia suffer only collateral damage and that we can do little else than to do it. try to cover future production in case of decline, "said Villamizar.
Valencia, for its part, pointed out that "low prices mean potential devaluations of several Latin American currencies and more pressure for emerging countries." What can be done to create incentives? to participate in the most important value chains of globalization ".
OTHER EFFECTS
The price of oil has many effects in other countries than the major powers. For example, those who import crude are at a low price, while exporters suffer from it.
In addition, as experts say, in a global downturn like this one, a low oil price may provide additional support for developed countries during the winter, as lower costs would provide a break for households and businesses and help curb GDP.
Rubén López Pérez
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