Why Did Oil Return to $100? War, Hormuz, and Uncertainty

In 2026, Brent crude reached between $108 and $110 per barrel, driven by a combination of geopolitical tensions that international markets immediately priced in. For Colombia — a net oil exporter — this carries direct and urgent consequences.

📍 The Geopolitical Risk Map
Strait of Hormuz
~20%
of the world's oil passes through this chokepoint between the Persian Gulf and Iran. Any risk of closure automatically raises global prices.
Risk Premium
When supply routes are threatened, markets don't wait for an actual disruption: they add a premium to the barrel price immediately.
Russian Infrastructure
Attacks on Russian energy facilities reduced available supply in the market, adding upward pressure on top of what Middle East tensions were already generating.
Colombia as an Exporter
~740,000 barrels per day produced (ANH, 2026). Every dollar Brent rises directly benefits Ecopetrol's revenues and the Colombian government's coffers.

The mechanism is simple: when the Strait of Hormuz is under threat, markets don't wait for a physical closure. The uncertainty itself is enough to move prices. And that risk premium travels instantly to what Colombia receives for every barrel it exports.

"If Colombia decides not to produce a barrel, that barrel doesn't disappear... it will probably be produced by Saudi Arabia, the United States, or Brazil. The only thing that changes is who receives the money." — George Castro, EP019

That statement captures one of Castro's central arguments: Colombia cannot afford to be ashamed of being an oil-producing country. As long as global demand for oil exists — and it will exist for decades — someone will produce it. The question is whether that money stays in Colombia or goes to another country.

Who Wins: Ecopetrol, the Regions, and the Peso

A barrel at $100 does not distribute its benefits evenly. There are actors who gain directly and immediately, and Castro identifies them precisely.

$6.1T
Ecopetrol net profit in Q2 2026 (trillion Colombian pesos)
~$5T
Dividends from Ecopetrol to the majority shareholder (State) in 2026
740K
Barrels per day produced by Colombia (ANH, 2026)
▲ Who Wins
🏢
Ecopetrol and the State
The Colombian state is Ecopetrol's majority shareholder. Higher prices = more profits = more dividends to the treasury. In 2026, those dividends already exceeded 5 trillion pesos.
🏘️
Oil-Producing Regions
Higher barrel prices → more royalties → more resources for local roads, hospitals, and schools. President Abelardo de la Espriella was praised for his anti-corruption stance on managing these royalties.
💵
The Colombian Peso
740,000 barrels per day at a higher price means more dollars flowing into the country. More dollars → better external balance → a stronger peso against the dollar.

The Bank of the Republic confirmed in 2026 that higher oil prices were among the factors contributing to the appreciation of the Colombian peso against the dollar. And the National Hydrocarbons Authority (ANH) launched a strategy to reactivate exploration and increase national production, recovering ground lost during the previous administration.

"Colombia cannot afford to be ashamed of being an oil-producing country." — George Castro, EP019

Who Loses: Consumers, Inflation, and Debtors

Rising oil prices are not good news for all Colombians. Castro is explicit: there are clear winners, but also real losers who often remain invisible in official analysis.

📋 What is the FEPC?

The Fuel Price Stabilization Fund (FEPC) is the mechanism that acts as a buffer between international oil prices and domestic gasoline and diesel prices. When Brent rises, the FEPC absorbs part of the difference to avoid passing it abruptly to consumers. In the first half of 2026, the FEPC accumulated a balance of around 8 trillion pesos, with projections to reach between 8 and 12 trillion by year-end. That balance is not free: it is ultimately financed by the Colombian state — meaning all taxpayers.

▼ Who Loses
🛒
Consumers
Higher oil prices pressure transportation, energy, and food production costs. Even with the FEPC buffering, the effect reaches the wallets of all Colombians through higher prices throughout the economy.
📈
Inflation
The Bank of the Republic was already registering inflation above its 3% target in 2026. With expensive oil, it takes longer and costs more to bring inflation back down — meaning higher rates for longer.
🏠
Debtors
When inflation rises, the central bank cannot cut rates quickly. Households with consumer credit, businesses needing financing, and those trying to buy homes pay the consequences through higher borrowing costs.
"Revenues rise temporarily and spending rises permanently." — George Castro, EP019 — On Colombia's historical boom trap

That phrase summarizes decades of Colombian economic history. When a windfall arrives, the state tends to expand its spending structure — more bureaucracy, more subsidies, more permanent commitments — which it cannot reduce when prices fall. The result: more debt and less room to maneuver for the next crisis.

It Wasn't an Energy Policy: It Was a Party

Colombia has had coffee booms, coal booms, and oil booms. None translated into the infrastructure the country should have today. Why? Castro doesn't look for culprits in geography or natural resources: he finds them in decisions.

🚫 The Repeating Pattern
  • Windfall arrives → public spending increases
  • Permanent programs and subsidies are created
  • Debt grows faster than revenues
  • When prices fall, no room to maneuver
  • Roads, ports, and hospitals remain the same
✅ What Should Happen
  • Windfall arrives → public debt is reduced
  • A portion of extraordinary revenues is saved
  • Durable, productive infrastructure is built
  • Exploration is activated to secure the future
  • Conditions are created for private investment

The previous Colombian government (Petro) adopted an explicitly anti-oil exploration and production policy, citing environmental reasons. Castro rejects this framing as a false choice: "If Colombia decides not to produce a barrel, that barrel doesn't disappear... it will probably be produced by Saudi Arabia, the United States, or Brazil. The only thing that changes is who receives the money."

"We didn't have an energy policy. We had a party." — George Castro, EP019 — On Colombia's past booms

The distinction is central: an energy policy thinks in decades — infrastructure, diversification, orderly transition. A party spends the money when it arrives and leaves the hangover behind. Colombia, according to Castro, has had too many parties and too few serious policies.

The good news: the ANH launched a strategy in 2026 to reactivate oil and gas exploration, recovering capacity that had been dismantled under the previous government. And President Abelardo de la Espriella adopted a public anti-corruption stance on the management of regional royalties — one of the most sensitive points in Colombia's history of administering oil windfalls.

"The intelligent transition consists of using today's wealth to finance tomorrow's economy." — George Castro, EP019

Five Priorities for Not Wasting This Windfall

Castro doesn't just diagnose. He proposes five concrete priorities so this windfall has a real, lasting impact on Colombia — not just on Ecopetrol's balance sheet, but on the daily lives of Colombians for generations to come.

  1. Reduce Public Debt
    Before distributing or spending, Colombia should use extraordinary revenues to reduce its debt burden. Less debt = less interest = more room to manage the next crisis without austerity measures.
  2. Save a Portion
    Sovereign wealth funds exist precisely to hold part of windfall revenues for future use. Colombia has had similar mechanisms but has used them too little and too late in past booms.
  3. Invest in Productive Infrastructure
    Roads, ports, logistics, connectivity: the infrastructure that raises productivity across the entire economy and reduces costs for all sectors. Not photo-op projects, but investments that pay dividends for decades.
  4. Incentivize New Exploration and Production
    Today's oil funds today's state. But Colombia needs to ensure there will be oil tomorrow. That requires active exploration now — not abandoning fields or frightening investors with regulatory uncertainty.
  5. Create Conditions for Private Investment
    Legal certainty, clear rules, contracts that are honored. Castro is explicit: "When a windfall appears, statism sees: there's money to spend more. I see: there's more capital to invest."
"Natural resources don't make a country rich — the institutions that know what to do with them do."
— George Castro · EP019 · Castro's Common Sense

Castro's conclusion is both a diagnosis and a challenge: Colombia has everything it needs for this windfall to be different from the ones before. The resources are there. The intelligence is there. What is needed is for institutions — and the citizens who elect them — to decide this time to do things right.

"Oil at $100 is not a blessing, nor is it a curse. It's an opportunity. The difference is not under the ground. It's above. It's in the decisions." — George Castro, EP019
About George Castro

George Castro is a Colombian-American political analyst, entrepreneur, and one of the most influential figures in the Colombian community in the United States. For decades, he has played a prominent role in civic, business, and community life, bringing together political, diplomatic, institutional, and community leaders from Colombia and the United States while remaining actively involved in issues that matter to Colombians both inside and outside the country.

As the creator of @CastrosCommonSense, Castro brings that experience to a platform for direct and independent analysis of politics, the economy, and the major issues affecting Colombia. His approach seeks to move beyond slogans and partisan loyalties to provide context, judgment, and common sense to Colombians wherever they live.