Oil and Budget

International oil prices have experienced a steady downward trend since June. Two indicators are causing concern for Ecuador and could impact the National Treasury. The West Texas Intermediate, which is the crude marker for our country, has fallen at the start of September to $93 after having been more than $102 per barrel. Today, Oriente Crude sells at $87.9, while in June, it reached $105. Both make up the Ecuadorian sale of 550,000 barrels per day. Discount must be added to the quality of Ecuadorian oil, which despite not being rated as high quality, currently costs around $10 for each oil barrel exported. Various converging factors have caused this variation: the summer season in the Northern Hemisphere, which reduces the amount of fuel consumption; the expectation of reserves and exploitation of shale oil in the United States (oil “fracking”); and the maintenance of extraction levels in Iran and the Arab countries. Certainly, what is taking place in Syria and Iraq could affect prices, especially the American bombing of wells controlled by the Islamic State, which continues to sell oil in the areas it has captured. Normally, conflict will cause prices to rise. In Ecuador’s case, setting oil prices is key to financing the general budget for 2015.