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Falling oil prices badly impact Latin American oil producers

24 Apr 2020

Latin America crude oil producers, such as Mexico, Ecuador and Venezuela, are affected by the global oil glut and collapsing US prices, since their prices are indexed on US prices that recently fell below zero. Some sellers have adopted new clauses introducing a US$10c/bbl floor price, while Venezuela's Merey crude is being offered at US$1-2/bbl only after trans-shipping fees off Malaysia. Prices for Colombian and Brazilian crude oil, which are indexed to Brent, have remained positive, at around US$9-15/bbl. Argentina and Ecuador have cancelled recent tenders to sell crude on the spot market for May and June 2020 delivery due to low oil prices and a lack of interest from potential buyers.

Around 5 mb/d of heavy crude from Latin America are sold on the United States (US) Gulf Coast, with half of this volume sold under long-term supply contracts and half sold on the spot market.

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