Argentina: Fuel prices might increase after elections
Major players of the industry have left the door opened to a possible rise if the macroeconomic situation of the country worsens.
Up until now, Argentina has evaded the consequences of the recent rise of oil prices worldwide. After the low demand during 2020, the reactivation of the world led to a 64% increase in the price of Brent crude oil barrel, something that seems to have not affected the Latin American country. But with the upcoming legislative elections, the context could change drastically.
Argentinian oil prices do not follow the reality of the international market because they are not established by law or decree, but rather a tacit agreement between its major players. Last May, state oil company YPF announced that it will increase its prices, it being the last update up until the end of the year. But recently, the firm has changed its view in relation to the economic context of the nation.
According to Clarin, during YPF’s last presentation to investors, top executives pointed out that a rise in fuel prices would be feasible if the macroeconomy situation evolves in an unexpected way. Currently, local prices are set by the company which concentrates most of the energy market in the country. If the firm doesn’t increase its rates, other companies won’t and vice versa, cites the newspaper. On the other hand, Wall Street analysts were told by YPF managers that the increase of prices “depends on the evolution of the local crude oil price, and other variables such as inflation and devaluation, which we are constantly monitoring."
For the Argentinean outlet, the situation is directly related with the recent announcements from the Government in order to stimulate the economy. It informs that, with the next legislative elections in sight, the macroeconomic context of the country could change for the worse if the official party loses to the opposition at the polls, something that already happened in the primary elections last September. This can also lead to an increase in the price of oil if industry players keep applying pressure regarding the rise of international values.
