WTI oil, which is the benchmark for Ecuador, has risen more than $9 during this March 1, 2022. Inflation can skyrocket in the country.
One of the sectors hardest hit by the war between russia and ukraine is the energetic. The cost of fuelsgas and electricity is in an upward spiral globally.
During this March 1, 2022, the price of the WTI oilwhich is the reference for Ecuadorstarted at $96.07 and is currently above $105 per barrel.
In other words, so far this session there has been an increase of more than $9, or about 10%. During the first day of Russia’s full invasion of Ukraineon February 24, 2022, There was already a rise that reached above $98.
Damage to the Ecuadorian economy
Although this situation may seem favorable for Ecuadordue to the increase in oil revenue, the pocket of the citizens may be affected, because inflation would skyrocket. Additionally, millions in non-oil exports are at risk.
The former Minister of Economy, Mauricio Pozo, explained that the problem between Russia and Ukraine is not going to benefit anyone, worse Ecuador. “The rise of oil price it will not offset the impact of higher derivatives prices, higher external inflation, lower exports, including to Russia, and less external liquidity. Everyone loses,” he said.
On March 12, 2022, for example, the price of the super gasoline, which is the only liberalized one in the country. A month ago, it was already quoted at $3.68 per gallon. According to estimates, this fuel could exceed $4 per gallonand make internal costs even more expensive.
Sanctions on Russia complicate the picture
The financial sanctions imposed by Western countries on Russian assets, funds, companies and banks, and especially on Moscow accounts in the international payment system Society for Worldwide Interbank Financial Telecommunication (SWIFT), left the Kremlin practically on the verge of isolation and financial collapse.
This decision led to the suspension of trading activity in Moscow and a severe collapse of the Russian currency, the ruble, which fell 25% closing at 105 units per dollar.
This scenario has further complicated the difficulties in the energy supply coming from Russiawhich is directly related to the increase in the price of crude oil, which has accumulated an additional 30% since the beginning of 2022.
In addition, the escalation of the conflict led several oil companies such as the Dutch Shell and the British BP to abandon their projects and businesses in Russia.
It is not yet known what will happen to other companies such as Exxon, which has businesses and holdings in common with Russia’s Rosneft, or companies such as Halliburton with high exposure to Russia.
Even with everything, the market awaits with expectation the meeting in which the OPEC+ oil cartel will have to decide whether to increase its production to try to mitigate the escalation in the crude oil prices.
Saudi Arabia, the main producer of Petroleum It has already anticipated that it will be inclined to maintain the increase in supply at around 400,000 barrels per day, which is considered insufficient for importing countries.
In response, consuming countries have said they will pour a new portion of their world strategic oil reserves back onto the market.
fear of one prolongation of the conflict and a new interruption in the supply of inputs also boosted the demand and the price for metals such as gold. (JS)
#Ukraine made a special request to #China ???? in the middle of the war. We tell you ???????? https://t.co/RJdmzI7OvW pic.twitter.com/vmVsHw6E8L
– The Ecuador Time (@lahoraecuador) March 1, 2022
