|« Colombian President Juan Manuel Santos seeks to develop more economic ties between Latin America and Europe during his visit to Paris in late January, as his country’s oil producers ship more oil to European markets.|
(Miguel Medina/AFP/Getty Images)
Latin American crude oil producers are starting to reorient their exports away from the United States and toward Europe, according to a Wall Street Journal report. Author Reza Amanat reported the following:
Crude-oil producers in South America are shying away from the U.S. in favor of markets thousands of miles across the Atlantic, a sign that soaring crude prices in Europe are disrupting well-established trade flows.Producers in Colombia and Ecuador are bringing their oil to Europe’s Mediterranean ports to take advantage of the high price of Brent crude-oil futures, the benchmark in Europe, compared with the U.S. price for the West Texas Intermediate blend.
The $7.30 gap between the two on Wednesday was the biggest since February 2009. Brent on ice Futures Europe settled 36 cents higher at $98.16 a barrel; wti crude finished 52 cents lower at $90.86 a barrel on the New York Mercantile Exchange.
A price difference of $5-$6 a barrel is enough to make it economically feasible for South American crude to find a buyer in Europe, traders say. However, oil that has to travel 15 to 20 days can be shut out of the market if Mideast exporters drop their prices.
The European Union is the largest investor in Latin America, as well as the region’s second-largest trading partner. The Trumpet has being predicting for years that the United States would one day experience severe resource shortages due to the formation of a gargantuan trading bloc between Europe and Latin America. In May 1962, the Trumpet’s predecessor, the Plain Truth, declared that “the United States is going to be left out in the cold as two gigantic trade blocs, Europe and Latin America, mesh together and begin calling the shots in world commerce.”
Watch for this to happen. The current reorientation of South America’s Brent crude-oil exports is just a beginning.