Imbert on a ‘wait and see’ as oil prices jump

CARLA BRIDGLAL

Brent crude, the international benchmark price for oil, hit a two-and-a-half-year high yesterday, reaching $61.69 per barrel, but Finance Minister Colm Imbert believes the temporary jump will not assist Trinidad and Tobago in a significant way.

“The higher prices will have to be sustained for several months to have any great impact on Government revenues,” Imbert told Newsday via text message yesterday.

The last time oil hit such relatively lofty heights was in July 2015. Oil has been making a slow but steady climb since the second half of this year. According to the Financial Times, much of this price resilience has been because of a tightening in the oil market driven by a decision in January by the Organisation of Petroleum Exporting Countries (OPEC) to cut production by 1.8 million barrels of oil per day or about two percent of global supply.

The oil market has been quite unstable for the last three years, with wild fluctuations, Imbert said. “I am adopting a wait and see approach, because the tendency of increased US shale oil production to depress world oil prices is still there.

Other factors are at play, such as OPEC production cuts and geopolitical instability, but oil price volatility remains a real concern,” he said.

He added that TT uses the American-based West Texas Intermediate (WTI) price as our benchmark.

Brent crude, is however used by oil companies bpTT, Perenco, and BHP Billiton as their benchmark, so the Government will likely still collect some extra revenue through the Supplemental Petroleum Tax (SPT).

At press time, the price of WTI crude was US$54.93 and Brent was US$61.32.

The 2018 budget is pegged on an estimated oil price of US$52 per barrel.