Juan Carlos Echeverry holds a degree in Economics from Universidad de los Andes; a Ph.D. in Economics from New York University; a Diploma in International Economics from the Kiel Institute for the World Economy in Germany; and has pursued postgraduate studies in Philosophy at the Complutense University of Madrid, Spain.
He has served as Minister of Finance, CEO of Ecopetrol — Colombia’s largest company — Dean of the School of Economics at Universidad de los Andes, and Director of the National Planning Department. He has taught and lectured at various universities in the United States, Europe, and Latin America.
He is a founding partner of EConcept, an economic consultancy firm with operations in Bogotá and Washington, DC. He is an expert in leading high-performance teams in public policy and crisis management and is a renowned public speaker.
He authored the novel In Darker Places (En sitios más oscuros), published in 2019; in 2022, he released A Year of Solitude: Chronicles and Lessons from a First-Time Politician (Un año de soledad, crónicas y lecciones de un político primíparo), based on his presidential campaign experience; and in 2023, the book Saving Ecopetrol: Leadership in Times of Crisis (Salvar a Ecopetrol, liderazgo en tiempos de crisis), all published by Planeta.
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Dr. Echeverry, in recent months we have witnessed a significant drop in oil prices, with Brent crude falling by more than US$5 and WTI by nearly US$6 in a single day, driven by renewed trade tensions between the United States and China.
Moreover, President Donald Trump has implemented a tariff policy that has generated uncertainty in global markets.
1. How do you assess the impact of the recent trade policies implemented by the United States government on the global oil market?
The recent measures adopted by the United States administration in the field of energy have slowed down the oil market and driven prices down. This is because tariff policies, as was reasonably foreseeable, have a restrictive effect on both the Chinese and the U.S. economies.
What is the underlying cause? Tariffs are, essentially, taxes. And, as with any tax, their application tends to reduce economic activity. When consumers must allocate a significant portion of their spending on goods and services to the payment of taxes to the State — in the range of 10, 20, or even 30% — aggregate demand declines, even when disposable income remains unchanged.
This phenomenon has a recessionary impact, as it reduces both household and business consumption and investment. Furthermore, it is a distortionary effect because tariffs are not applied uniformly. The rates imposed on China, for example, differ from those applied to Vietnam, Brazil, or Germany. This leads to a redirection of international trade and demand — not for reasons of economic efficiency, but due to discretionary decisions by the State.
As a result, these measures contribute to a contraction in global GDP. Given that GDP is highly energy-intensive — particularly in hydrocarbons — the decline in global economic activity directly translates into lower demand for these fuels.
Added to this is an additional effect, uncertain and difficult to quantify: the volatility associated with the duration and stability of these policies. The lack of clarity regarding their permanence creates a precautionary paralysis among economic agents.
It should be recalled that the United States remains the principal anchor of the global economy and global public policy. Thus, when its government adopts unstable trade positions — such as the variable application of tariffs — it introduces a new systemic cost: a kind of additional tax that affects both households and firms by increasing uncertainty in the international economic environment.
2. Given the drop in crude oil prices, what strategies do you consider most effective for oil-producing countries, particularly in Latin America, to adapt to this new scenario?
First, it is essential to understand — especially when dealing with oil companies — that the effects of tariff measures vary significantly between countries such as Brazil, Colombia, Argentina, and Mexico. In the case of Mexico, there is a deep trade agreement that includes Canada, which places it in a different position.
Colombia and Brazil, on the other hand, were both subjected to the same 10% tariff, despite their structural differences. Colombia maintains a trade deficit with the United States — in other words, the U.S. has a trade surplus with Colombia — whereas Brazil is considered a country with multiple trade distortions that affect the U.S. Nevertheless, these differences were not taken into account. In fact, in Brazil, a much higher tariff was expected. When the 10% rate was announced, the estimated impact was marginal, less than 5 billion dollars, according to estimates by Itaú Bank.
Both Colombia and Brazil were encouraged by the fact that the tariff imposed on Vietnam — one of the largest coffee producers — reached levels close to 30%, while their own tariffs remained at 10%. In net terms, this situation represented a relative benefit for Colombia.
In short, the tariffs announced for Latin America were flat and set at 10%. While distortionary, they were less so than those imposed on Asian countries. In view of the uncertainty surrounding potential reactions, the most prudent approach in this context seems to be to remain cautious and wait.
From the perspective of oil policy and companies such as Petrobras, Ecopetrol, YPF, or Pemex, the fall in crude prices has a direct impact: lower revenues and profitability. Not all oil fields in the region operate above their break-even point, which is usually above 60 dollars per barrel.
As a result, some fields will have to shut down. Generally speaking, Brazil’s offshore deposits are highly efficient, as are most of the fields in Colombia. I am not familiar with the break-even point for YPF, but in the case of Mexico, the situation is likely to have significant consequences. Ultimately, energy policy must be adjusted on a field-by-field basis, according to specific efficiency levels.
3. Colombia has historically depended on oil exports. What is your outlook for the future of the Colombian oil industry in this context of global volatility?
Colombia is currently facing a considerable threat to its oil industry, even more serious than those arising from U.S. tariff policy: namely, the administration of President Gustavo Petro. The industry is being weakened by the absence of exploration licenses and the lack of permits to develop major offshore discoveries, such as the Gorgon and Purple Angel blocks, located in the southern Caribbean, as well as other fields near the border with Panama. Exploration of the Komodo-1 field, in partnership with Anadarko, has been suspended, and it remains to be seen whether sufficient progress will be made on the Sirius field, in cooperation with Petrobras.
In the continental territory, the outlook is no more promising. The leadership of the national environmental licensing authority has been assumed by a figure who, during her tenure at the Ministry of Mines and Energy, held a clearly adversarial stance toward the oil industry. To this is added new leadership at the National Planning Department, aligned with the same ideological approach. This configuration reflects a personalist policy logic, in which institutional decisions are subordinated to individual convictions. As long as such profiles remain at the helm of key institutions — and the executive maintains its skepticism about the role of oil in national development — the negative impact on the energy sector will be deeper than that caused by any external tariff measures.
In addition to this politically hostile environment, the industry is also facing a decline in international crude prices, increased tariffs from the United States, and distortions in steel markets — a critical input for drilling operations. All these elements create a scenario of high vulnerability for the Colombian oil sector.
4. What measures do you recommend to diversify the Colombian economy and reduce dependence on oil?
Colombia has, for some time now, been implementing measures that favor economic diversification. One of the most relevant has been the maintenance of an undervalued exchange rate, which has functioned as a powerful stimulus to exports: it allows for more pesos to be obtained per dollar, thereby reducing the relative value of wages and costs in dollars and increasing export profitability. As a result, exports of non-traditional goods — excluding coffee, oil, and coal — currently total around 25 billion dollars annually, which demonstrates an ongoing process of diversification.
Additionally, the country is experiencing a notable tourism boom: nearly six million visitors per year generate revenues close to 6 billion dollars. To this must be added remittances which, although they do not represent a source of productive diversification, constitute a significant source of foreign currency income. These exceed 12 billion dollars annually and have become the second-largest external income stream after oil. Together, these factors strengthen the Colombian economy, gradually reducing its dependence on hydrocarbons and opening space for new sources of growth.
5. How can Latin American countries collaborate with one another to confront the challenges posed by the policies of the United States and other global actors?
There has been persistent talk of the need for greater integration among Latin American countries to face common challenges. However, more than a viable proposal, this idea often responds to political wishful thinking rather than practical reality.
Latin America faces enormous geographical obstacles that hinder intraregional trade. The first is the Amazon rainforest, a natural barrier of colossal proportions that separates the eastern and western coasts of the continent. Its virtually impassable nature prevents the construction of land infrastructure such as highways or railroads. Transporting goods from Colombia, Peru, Chile, or Ecuador to Brazil, Argentina, or Uruguay requires costly and lengthy maritime routes, whether via the Panama Canal or the Strait of Magellan. In fact, it is easier and cheaper to export northward — to the United States or Europe — than to other regions within the same continent.
The second obstacle is the Andes mountain range, which further increases logistical costs. Added to this is the continental scale of South America, comparable to that of Africa: the distances between countries like Colombia and Chile or Peru make regional trade less competitive than transoceanic alternatives.
Finally, there is a structural limitation: the size of the economies. Markets such as Peru, Ecuador, or Chile do not offer sufficient demand to justify economies of scale on their own. High costs in transportation, logistics, and port operations further exacerbate the problem. Consequently, while the narrative of Latin American integration resurfaces each time relations with the United States deteriorate, in practice it remains more of a symbolic aspiration than a feasible reality.
6. Considering Venezuela’s political and economic situation, how do you perceive the impact of the Venezuelan crisis on the global oil market? What opportunities or challenges does it present for countries in the region, particularly Colombia?
Venezuela is currently producing approximately two million barrels per day less than its full potential. This reduction in global supply directly benefits countries such as Iran, Russia, and, to a lesser extent, China. For Russia and Iran — both net exporters of crude oil — Venezuela’s absence from the market is advantageous, as it helps to restrict international supply and, consequently, drive up prices. Unintentionally, Venezuela ends up favoring the interests of these countries, while its own population bears the costs of a structural crisis that has drastically reduced the country’s economic activity and productive capacity.
From the Colombian perspective, Venezuela’s economic deterioration represents a significant loss. Under normal conditions, Venezuela would be Colombia’s most important commercial partner in the region. The contraction of the Venezuelan economy and its limited demand capacity directly affect Colombia’s opportunities for trade and growth.
7. Regarding President Petro’s “anti-oil exploration” policies, how do you view the potential reactivation of gas exploration within Colombian territory?
The current administration has made it clear that it will not promote the development of fracking. However, in a future administration — should Colombia overcome this current period — it will be essential to reactivate this extraction technique. During the previous government, the debate around fracking was complex and lacked clarity, although Ecopetrol was already prepared to begin pilot drilling.
Fracking offers a key advantage: if results prove economically viable, it can begin contributing gas within a relatively short timeframe — between one and one and a half years. Furthermore, this gas would be located in the central region of the country, where existing transport and distribution infrastructure would facilitate delivery to households and businesses.
Energy is an essential input for development. Without it, no country can sustain a modern economy, as demonstrated by the case of Mexico. And without the exploitation of unconventional gas reserves, it will be extremely difficult to ensure affordable energy. Colombia must generate a surplus of gas, and this possibility is currently being obstructed. Therefore, the reactivation of fracking — particularly in the country’s interior — would have a decisive impact on long-term economic growth.
8. How would you view the promotion of a potential commercial alliance between a Colombian and a Venezuelan company for a future exploratory partnership along the shared border in search of oil or gas?
In the Venezuelan context, the only company with significant operations in the oil sector is PDVSA. Although there may be private firms, there is no clear public information about their size or operational capacity. In contrast, Colombia has several companies with foreign capital and some smaller ones of national origin, with Ecopetrol being the leading firm in the sector.
A general alliance between Ecopetrol and PDVSA does not appear to be a recommendable option, neither under the current government nor the next. However, this does not preclude the possibility of establishing specific collaborations. If exploration and production are reactivated in Venezuela at some point, and PDVSA proposes strategic partnerships in specific fields, opportunities for cooperation could emerge.
This type of joint venture is common practice in the global industry, and PDVSA has already established them with other international companies. In such a scenario, Ecopetrol could identify concrete opportunities for participation with high productive potential.
The views expressed by Dr. Echeverry are of his pesonal ownership and responsibility, and do not necessarily reflect the position of the company.
