Page 4 - LatAmOil Week 12 2020

LatAmOil COMMENTARY LatAmOil
Pemex is likely to have a hard time making $30bn in payments to bondholders in 2024 (Photo: Mexico News Daily)
Sudden impact
Mexico, Guyana and Venezuela are all feeling the pinch as world oil prices slip
WHAT:
Mexico, Guyana and Venezuela are confronting unexpected obstacles.
WHY:
All three states were expecting oil to gener- ate significantly more revenue this year.
WHAT NEXT:
Low prices could lead Mexico to a ratings downgrade, Guyana
to increased political tension and Venezuela to even fewer options for oil sales.
WORLD oil prices stayed on a mostly down- ward trajectory in the first two months of 2020, but the pace of the decline picked up considera- bly after March 6, when Russia rebuffed OPEC’s call for the expansion of production cuts.
As of press time, WTI, which opened the year above $60.00 per barrel, was trading at prices close to $25.00. Likewise, Brent, which opened the year at $66.00 per barrel, was selling for $30. In other words, prices for both of these benchmark crudes have dropped by more than 50% since January 1, and they reached the steep- est part of the slide less than three weeks ago.
But the drop in prices does not just affect sellers of WTI and Brent. Producers of more obscure grades are also feeling the pinch. This essay will take a brief look at how three Latin American countries have been weathering the storm on world oil markets.
Mexico
The price crash has had a significant impact on Maya, Mexico’s main grade of heavy crude oil.
When the year began, Maya was trading at around $55 per barrel – that is, about $5 below WTI and $11 below Brent. These discounts are not unreasonable, given that Maya is heavier and therefore more difficult to refine into high- value light fuels such as gasoline.
Since March 6, Maya has followed other grades of crude, losing value quickly after the collapse of the OPEC-plus agreement. But at some points, it has gone even lower than other grades. On March 18, the official sale price of Maya crude for delivery to US Gulf Coast desti- nations closed at just $12.92 per barrel.
This was down by $6.21 or 32.5% on the pre- vious day, but it was also down by more than $32.00 – or a staggering 76.5% – on the prices prevailing at the start of 2020. It was also the low- est closing price registered since January 2002.
Maya was quick to show signs of recovery
after March 18, moving above the $18.00 per
barrel mark on March 19. On March 25, though,
the closing price was back down to $16.81 per barrel. 
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w w w . N E W S B A S E . c o m Week 12 26•March•2020