Mexico's Acapulco Hopes for Rebound as Virus, Violence Drop

Members of Mexico's National Guard keep watch during the reopening of the beaches and hotels after confinement measures were eased this week, in Acapulco, Mexico July 2, 2020. (Reuters)
Members of Mexico's National Guard keep watch during the reopening of the beaches and hotels after confinement measures were eased this week, in Acapulco, Mexico July 2, 2020. (Reuters)
TT

Mexico's Acapulco Hopes for Rebound as Virus, Violence Drop

Members of Mexico's National Guard keep watch during the reopening of the beaches and hotels after confinement measures were eased this week, in Acapulco, Mexico July 2, 2020. (Reuters)
Members of Mexico's National Guard keep watch during the reopening of the beaches and hotels after confinement measures were eased this week, in Acapulco, Mexico July 2, 2020. (Reuters)

Mexico’s Pacific coast resort of Acapulco is putting its hopes on a return of tourists as the number of coronavirus cases drops and the violence that drove travelers away slowly declines.

The governor of the state of Guerrero said Friday that hotels will now be allowed to accept guests at 40% capacity, up from 30% previously under pandemic restrictions. Gov. Hector Astudillo bragged that Acapulco has reduced the number of COVID-19 deaths to an average of 9.6 per day and alleviated the overcrowding that plagued the city's hospitals earlier in the pandemic.

The city, once ranked as the fifth most deadly in Mexico, has fallen to 44th place. Homicides were down about 20% in the first half of 2020, compared to the same period of 2019.

President Andrés Manuel López Obrador visited the once-glamorous resort Friday and pledged to fix pollution problems that affect the resort’s famous bay.

“We are going to clean up Acapulco, we are going to clean up the bay so that there is no more pollution. That is my commitment,” he said. In June, heavy rains caused storm drains to overflow, sending sewage and waste into the bay.

Unlike most experts, López Obrador predicted a quick end to the pandemic.

“What I feel — my prediction — is that soon, very soon, we will return to normality,” the president said. “Economic activity is returning, tourism is returning to Acapulco, but I predict that in a month, two months, we will have very favorable conditions.”

Even if those predictions are fulfilled, it will still be a long road back for Mexico’s battered tourism industry. In the first quarter, tourism revenues were down 51.5% and figures for the second quarter are certain to be worse.

With about 800,000 hotel rooms, Mexico's has the world's seventh-largest hotel infrastructure. In 2018, tourism accounted for 8.7% of Mexico's GDP and provided about 2.3 million jobs.

Many of those jobs have evaporated in the pandemic. Even under the best-case scenario, if travel alerts were lifted — Mexico currently has the highest “do not travel” alert from the US State Department — hotels in Mexico would end the year with only about 47% occupancy, on average.



Oil Prices Ease but Remain Near 2-week Highs on Russia, Iran Tensions

FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford//File Photo
FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford//File Photo
TT

Oil Prices Ease but Remain Near 2-week Highs on Russia, Iran Tensions

FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford//File Photo
FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford//File Photo

Oil prices retreated on Monday following 6% gains last week, but remained near two-week highs as geopolitical tensions grew between Western powers and major oil producers Russia and Iran, raising risks of supply disruption.
Brent crude futures slipped 26 cents, or 0.35%, to $74.91 a barrel by 0440 GMT, while US West Texas Intermediate crude futures were at $70.97 a barrel, down 27 cents, or 0.38%.
Both contracts last week notched their biggest weekly gains since late September to reach their highest settlement levels since Nov. 7 after Russia fired a hypersonic missile at Ukraine in a warning to the United States and UK following strikes by Kyiv on Russia using US and British weapons.
"Oil prices are starting the new week with some slight cool-off as market participants await more cues from geopolitical developments and the Fed’s policy outlook to set the tone," said Yeap Jun Rong, market strategist at IG.
"Tensions between Ukraine and Russia have edged up a notch lately, leading to some pricing for the risks of a wider escalation potentially impacting oil supplies."
As both Ukraine and Russia vie to gain some leverage ahead of any upcoming negotiations under a Trump administration, the tensions may likely persist into the year-end, keeping Brent prices supported around $70-$80, Yeap added.
In addition, Iran reacted to a resolution passed by the UN nuclear watchdog on Thursday by ordering measures such as activating various new and advanced centrifuges used in enriching uranium.
"The IAEA censure and Iran’s response heightens the likelihood that Trump will look to enforce sanctions against Iran’s oil exports when he comes into power," Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia said in a note.
Enforced sanctions could sideline about 1 million barrels per day of Iran’s oil exports, about 1% of global oil supply, he said.
The Iranian foreign ministry said on Sunday that it will hold talks about its disputed nuclear program with three European powers on Nov. 29.
"Markets are concerned not only about damage to oil ports and infrastructure, but also the possibility of war contagion and involvement of more countries," said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Investors were also focused on rising crude oil demand at China and India, the world's top and third-largest importers, respectively.
China's crude imports rebounded in November as lower prices drew stockpiling demand while Indian refiners increased crude throughput by 3% on year to 5.04 million bpd in October, buoyed by fuel exports.
For the week, traders will be eyeing US personal consumption expenditures (PCE) data, due on Wednesday, as that will likely inform the Federal Reserve’s policy meeting scheduled for Dec. 17-18, Sachdeva said.