Q COSTARICA — Fuel and food prices are expected to rise in Costa Rica in the coming weeks due to the war in the Middle East.
On Tuesday, the price of a barrel of WTI crude, the benchmark for the national economy, reached US$112, compared to US$67 in mid-March.
The Refinadora Costarricense de Petróleo (Recope) — Costa Rica’s oil refinery that refines nothing — warns that the price adjustment will depend on the regulatory authority of public services (Aresep), while the closure of the Strait of Hormuz is putting pressure on the global market.
Furthermore, increases in freight and fertilizer costs could impact food prices in the coming months.
Recope said on Tuesday that it will explain the situation in the coming days, along with several measures to mitigate the impact.
Other effects
Reduced economic growth, more expensive imported goods, and an increase in the dollar exchange rate are among the potential consequences.
In addition, the Costa Rican government would face higher interest rates to pay its foreign debt, and therefore, the Banco Central (Central Bank) is expected to be more cautious with the Tasa de Política Monetaria (Monetary Policy Rate).
Beyond the geopolitical tensions, Costa Rica will be indirectly drawn into the armed conflict.
According to Recope, the conflict in the Middle East would cause “a moderate, almost immediate increase in regular gasoline, diesel, and natural gas; while premium gasoline would decrease slightly.”