The volatility in international oil prices They remain for this week. Although Texas oil (WTI or Crude Oil) fell 5.17% yesterday Monday, today it recovers and is trading at US$95.8 per barrel; while the Brent —which fell 2.85% yesterday— today reaches US$ 102.8 per barrel, according to data from Trading Economics.
Until yesterday, prices were falling after the United States and Israel managed to stop the large-scale bombings and destruction actions that Iran had been carrying out. In addition, the Asian country stopped attacking oil refineries and gas plants, explains Arturo Vásquez, director of Research at Gerens and former vice minister of Energy.
However, this Tuesday crude oil prices rose again after Iran radicalized its attacks against key energy infrastructures in the Middle East and US allies did not respond to President Donald Trump’s call to reopen the Strait of Hormuz.
Although the United States announced the release of 172 million barrels of its strategic oil reserves and the International Energy Agency another 400 million barrels, Erick García, former director general of Hydrocarbons of the Ministry of Energy and Mines (Minem), predicts that prices could moderate. However, he doubts that the market will return to the levels prior to the oil emergency, when crude oil was at US$67. In addition, he warns that any slight drop “would be premature” to anticipate a sustained downward trend.
“With Trump’s announcement—that he was managing to stop the conflict—the price fell to US$84 a barrel and then rose again […] “We would have to wait until the end of the week to confirm a true trend,” he said.
The Hormuz blockade, through which around 20% of the world’s oil passes every day, threatens to unleash a global energy crisis. (EFE/Tasnim News)
Along these lines, Felipe Cantuarias, president of the Peruvian Hydrocarbons Society (SPH), maintains that the behavior of prices in Peru responds mainly to external factors.
“Fuel prices in Peru are directly linked to the behavior of the international market for oil and its derivatives. Therefore, the variations that we observe at the local level respond mainly to external factors, such as geopolitical tensions, production decisions of exporting countries or changes in global demand,” he explains.
In the short term, he adds, the market could continue to register fluctuations due to the sensitivity of the oil sector to these types of events. However, if international conditions stabilize, prices could also show greater stability.
For García, the price of crude oil should be around US$70 per barrel for a reduction to be perceived at the local level, especially since the market is also going through a period of strong speculation.
The climate factor has also become a challenge for the country, says Vásquez. Due to the strong waves, several ships have not been able to unload fuel, not only oil, but also derivatives such as gasoholes and LPG. This situation has also prevented a reduction in the price of the latter in the Lima market.
“The replenishment of fuel will take time because the logistics chain still needs to be reorganized. The plants first have to recover their inventories – in some cases almost exhausted – and then progressively dispatch. In addition, the strong waves of recent days have prevented the unloading of several ships,” he explained about the import of the different varieties of fuel.
Added to this is the country’s high dependence on the international market. According to Cantuarias, national production is insufficient to cover domestic demand.
“Today we produce around 40,000 barrels per day, while the country consumes around 290,000 barrels per day in liquid fuels. This means that we depend largely on imports, so any change in international prices ends up directly impacting the local market,” he warns.
In that sense, the price of LPG could remain high for more than a week. Currently, a gallon in Lima reaches S/18, when in other regions such as Arequipa the maximum price barely reaches S/10, according to Osinergmin‘s Facilito platform.
Vásquez specified that the waves prevented the unloading of a ship with 14,000 tons of LPG. But, for April importers have scheduled the transportation of about 30,000 tons.
“I believe that in the next 15 days or within a month this will be resolved, because imports have already been scheduled and the Pisco plant is already starting to produce normally,” he said.
LPG supply depends on Pisco while waves block discharge in Callao. (Photo: Andina)
The import process is prolonged, he explains, because the world faces a refining shortage due to the war in Ukraine and increased demand for fuel in the northern hemisphere during the winter.
For his part, García maintains that, as the logistical problem generated after the explosion is resolved, prices in Lima will tend to normalize.
“We are going to see the issue of prices soon, when the supply is normalized, and I think the supply will be normalized this week,” he stated.
