Tuesday, April 7, will be the deadline set by Donald Trump for Iran to reopen the Strait of Hormuz. Meanwhile, Mexico has also felt the effects of the conflict in the Middle East.
«For years, it was assumed that high oil prices automatically meant good news for public finances. Today, this analysis is insufficient,» the article states.
Analyst Enrique Quintana explains: «Yes, if crude oil prices rise, the public sector can receive additional income from oil exports, and this could at least partially offset the cost of reducing the IEPS tax on gasoline to avoid a full pass-through of higher import prices to the consumer».
He also notes: «If Trump continues to send contradictory messages and the crisis drags on, the impact will go far beyond the oil sector».
Another sensitive point will be exports, as expensive energy slowing down in the U.S. would negatively affect Mexico with weaker exports. On one hand, the relief from expensive oil would arrive, but on the other, it would be reflected in a loss of tax revenue.
Similarly, Mexico could face a third risk, as at a global level: pressure on food prices, coupled with possible financial volatility and an authority with little room for maneuver.
«If in the coming weeks negotiation prevails and transit through Hormuz gradually normalizes, the episode will leave a manageable and probably temporary cost,» Quintana analyzes.
«More than a strategy, Donald Trump's discourse on the war in Iran has become a risky bet, which gives no certainty to his people, much less to the markets,» he adds.
Last Wednesday, April 1, the President of the United States gave a speech that the market did not consider a way out of the energy crisis caused by the war. On the contrary, what Trump said was perceived by the market as mere threats, diffuse deadlines, promises of force, and a veiled idea that the U.S. needs more time to reopen the Strait of Hormuz.
«Markets, when they perceive bets instead of a roadmap, charge a higher premium,» asserts Enrique Quintana.
While financial analysts suggest that an open war could sink the world, the different powers call for finding the best path to peace, while the UN Security Council shows no signs of articulating a response.
Although Iran has not completely closed the Strait of Hormuz, as it administers it and only allows passage to countries that have spoken out against the U.S. attack, the situation has caused an energy crisis that has mainly hit the economies of Asia and Europe.
