São Paulo – After one year of higher prices, the price of oil should drop or at least remain stable this year, generating uncertainty as to the higher revenues of countries that produce the commodity. This scenery is projected by Brazilian analysts and is based on the current international panorama and on estimates by sector organisations and agencies. They have reviewed forecasts due to the deceleration of global economic growth, a result mainly of the crisis in developed nations.
The Organization of the Petroleum Exporting Countries (Opec), for example, reduced its forecast for growth in oil demand in 2012, from 1.1 million barrels a day to one million barrels a day. The International Energy Agency (IEA) forecasts consumption of 90.3 million barrels a day this year, reduction of 200,000 barrels over the previous estimate. The Energy Department of the United States has also reduced its consumption forecasts.
The CEO at the Arab Brazilian Chamber of Commerce, Michel Alaby, believes that stability or a slight reduction in oil prices, however, should not result in great problems to the oil producer economies and should not interfere in projects that are in progress there.
"As oil prices have remained high in recent years, the nations accumulated reserves,” explained Alaby. Walter de Vitto, an analyst at Tendências Consultoria Econômica, who believes in stability of oil prices, says that there will only be revisions of the budgets of Arab economies. “Oil prices are high,” he said.
Consultant and economics and politics professor at Rio Branco Integrated Colleges, Carlos Eduardo Stempniewski, believes, however, that a reduction may interfere in social questions in the Arab world, resulting in protests. "They have a serious problem, with is the high rate of unemployment,” said the professor. Lower oil revenues should also affect the establishment of projects for job generation, recalls Stempniewski, referring mainly to the great producers of oil, like Bahrain and Saudi Arabia. He said that Dubai, for example, which has already undergone financial problems, may have to renegotiate its debts.
Stempniewski believes that in a scenery of 10% to 15% lower oil prices, as forecasted by analysts. Tendências Consultoria Econômica projects Brent oil prices at US$ 107 per barrel, with 3.8% reduction over 2011, which is considered stability, and US$ 102.8 for WTI, with growth of 8%. WTI, however, whose contracts are traded on the New York Stock Exchange, had lower prices in 2011 due to logistics problems in the United States and there should therefore be growth.
Analyst Vitto justifies the Tendências forecasted stability. According to him, the countries in which consumption is more mature, like Europe, were not contributing so much to the greater demand. In the developing countries, responsible for much of the greater consumption, there should be greater demand. “Demand for oil is still on the rise, despite the lower pace,” said Vitto. In offer, there will be growth among the producers that are not members of the Opec, like Brazil, the United States and Canada. But the offer, according to the analyst, is hard to forecast, as it is subject to several factors, some technical.
Brazil
There is even risk of higher oil prices, in case there are problems in producer countries, like Saudi Arabia or Iran. Interferences like those occurred in Libyan oil fields during the civil conflict, for example, would be of greater consequence to the world in case they had taken place in Saudi Arabia, for example, points out Stempniewski. Libya answers to just 1.5% of global oil supply, whereas Saudi Arabia is the largest producer.
The Rio Branco college professor recalls that, despite the lower revenues that may result for Petrobras, the Brazilian oil company, lower oil prices would be beneficial to the Brazilian economy. The commodity has a direct impact on inflation, due to its heavy weight in sectors like transportation, thus interfering in the cost of food, among other consumer products.
*Translated by Mark Ament
