In 2014, world oil prices crashed, plunging economies with high production costs, such as Venezuela and Brazil, into turmoil. Colombia felt the pressure as well, and the value of the Colombian peso plummeted.
However, since then rising oil prices and increased efficiency have left room for optimism. Oil prices are expected to continue to rise, which will relieve pressure on Colombian producer’s margins. Technological innovation has multiplied this effect by lowering extraction costs and break-even prices. (In 2014, Colombia sported a breakeven oil price of USD $50 per barrel. Now, 80% of Colombian oil fields are profitable with oil at $42 per barrel.) Ecopetrol, Colombia’s largest oil producer, just returned to profitability for the first time since 2014. As a result, foreign investors are likely to see the value of their holdings across Colombia increase as the COP appreciates.
Read source post by: Matthew Smith
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