Peru faces economic pressure from rising oil prices and energy instability

Rising global oil prices, driven by geopolitical tensions between the United States and Iran and fears of blockades in the Strait of Hormuz, are impacting the Peruvian economy. Brent crude has reached approximately US$108 per barrel, while WTI is around US$102. This surge has increased the cost of sovereign debt in Peru, with the 10-year bond yield rising from 5.47% to 6.0%. Additionally, persistent imported inflation may force the Central Reserve Bank of Peru to maintain restrictive monetary policies.

Simultaneously, Peru faces domestic energy stability challenges. The marginal cost of electricity recently spiked from 36 to 285 dollars per megawatt-hour due to a reliance on expensive diesel generation. While the country has historically relied on Camisea gas, efficient gas reserves are depleting during dry seasons. Although renewable energy sources like solar and wind are increasing, their variability requires firm backup to avoid costly diesel consumption, posing a long-term risk to national industrial competitiveness.