As of Monday, December 5, The member countries of the European Union will stop buying crude oil from Russia by seawith an estimated initial impact of 90 percent of current imports from that country.
This measure excludes pipeline deliveries, a condition imposed by Hungary, a landlocked nation that relies heavily on Russian oil as well as natural gas.
Additionally, it was agreed to impose a cap of at least 5 percent below the price that Russian oil has in the global market, which means that European shipping companies will not be able to transport Russian oil to third countries when the price per barrel exceeds the agreed ceiling.
The intention is that the European veto generates pressure on Russian finances, although in reality everything is uncertain, because the measure comes almost 10 months after the start of the war against UkraineTherefore, possibly Vladimir Putin has been able to finance the invasion of that country with the income that the war has already generated in said period.
At the moment, the cap on the price of Russian oil does not affect that nation too much due to two factors: on the one hand, it is estimated that it costs Russia to produce a barrel between 30 and 40 dollarsand that its fiscal equilibrium point is located between 60 and 70 dollars, a price that is below what it costs today in international markets.
The other factor is due to the fact that, since the war began, Russia has also diversified its exports, which largely depended on Europe, a region to which it sold around 8 million barrels a day of oil and petroleum products.
Thus, Moscow successfully diverted supplies to Asia and exports fell only slightly to 7.6 million barrels per day.a, a minimal effect on the country’s finances.
But analysts of the global oil market believe that Russian oil production could drop by as much as one million barrels per day in early 2023due to the ban by the European Union.
The measure could have an uncertain effect on the price of oil; On the one hand, there are fears of a loss of supply, but there are also fears about lower demand in the midst of a global economy in full slowdown.
OPEC+ could move its pieces
Last October, to try to avoid a collapse in crude oil prices, the Organization of the Petroleum Exporting Countries (OPEC) and its external partners, known as the OPEC+ cartel, decided to reverse their production policy and announced a cut of the offer of 2 million barrels per day, effective as of November, the above represented the largest cut by the cartel since the Covid-19 crisis.
However, the efforts of the large producers have not been enough to change the trend in crude oil prices. Since October 12, when the decision was made, the barrel has fallen and has recorded an accumulated cut in its price of more than 6 percent since then.
In fact, the planet seems to assume that Europe and the United States are going to suffer an economic recession due to central banks and no matter how deep either, it will have a negative impact on demand.
In this way, analysts expect the price of oil to remain stable in the coming months, futures place it between 82 and 85 dollars throughout the coming year. For its part, the consensus of analysts collected by Bloomberg estimates a barrel at 96 dollars at the end of 2023, and 89 dollars in 2024.
This means that prices will not vary greatly in the next 24 months. This is good news on the one hand, but it would also have implications.
What happens is that prices reflect a market that has no definitions in terms of two factors: supply and supply.
On the one handgeopolitical conflicts can generate price pressures, and interruptions in supplies, which is the other factor. It is not known what can happen, for the moment, the prices reflect a certain stability, but they are also the starting point upwards or vice versa. The reflection of the above is the ceiling and the embargo on Russian oil by the European Union.
OPEC+, for its part, has the potential to unleash a storm on the oil markets, that’s for sure.
And Mexico?
The country is increasingly isolated from the world in its energy sectorThis would have its advantages in the current oil scenario, but also its consequences.
Despite the fact that oil prices in the world have risen and theoretically this has benefited the national oil company, the truth is that Pemex continues to be a drag on the country’s public finances.
According to an analysis by the Mexican Institute for Competitiveness (IMCO), between the months of January and September 2022, the average price of the Mexican mix of crude oil for export was 94.0 dollars per barrel, a price 48 percent higher than that observed. during the same period of 2021, which was located at 63.3 dollars.
However, Pemex maintains a negative net worth as its liabilities (3.91 trillion pesos) practically double its assets (2.32 trillion pesos) as a consequence of the recurring losses reported in previous years.
Only with these figures is the delicate situation of the company evident, despite the context of high oil prices. This year, the average for the Mexican mix is 100.41 dollars, it has been of little use.
The world’s oil markets continue to shake, this Monday a related event will be recorded, the consequences of which are unknown. Ultimately, the international price of oil depends precisely on global factors. The relative stability for the next two years, which the markets reflect up to now, could give the country oxygen to try to speed up the recovery of the most important public company in the country, but there is no guarantee of anything and the situation is so delicate that it takes more than two years to get her out of today in which she is.
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