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Amidst a currency devaluation and a 12,5% rise in fuel prices, oil companies in Argentina have agreed with the government to keep prices unchanged until the October elections.
After a whirlwind of devaluations and readjustments, the scenario of fuel prices in Argentina seems to have found a moment of stability, with eyes turned to the next elections. Several companies in the industry took the surprising decision to freeze fuel prices, while one market leader took a different route.
YPF announces an immediate increase while the other competing companies maintain prices
Last Monday witnessed an atypical movement in the Argentine fuel sector, when companies announced a 12,5% increase in prices, only to pull back in the face of a crucial political situation.
Both the government and the oil giants have agreed to keep prices stable until the October elections, in a rare show of mutual agreement.
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However, YPF, which holds a significant 55% share of the naphtha and diesel market, chose to defect.
The company, which had remained on the sidelines of previous increases, surprised by announcing that it would implement an increase of 12,5% even on Thursday, (1708).
This isolated movement puts the YPF in a prominent position, questioning the temporary uniformity that seemed to have been agreed upon.
The development of this situation was driven by the recent jump in the official exchange rate, a measure validated by the government on Monday.
This increase began to be passed on to fuel prices, with companies such as Shell, Axion and Puma Energy applying the 12,5% increase in naphtha and diesel.
The resolution of this impasse took place through a crucial meeting between government representatives, led by the Minister of Economy, Sergio Massa, and representatives of the oil sector.
As part of the agreement, the government granted tax benefits to companies, under the condition that they undertake not to violate the pact.
Fuel prices in Argentina seek stability amid election scenario
Sergio Massa pointed out: “The 12,5% increase will be the last until October 31st. Part of this burden will be shared between consumers, companies and the State, which will forgo part of its tax revenue on fuels. I thank the companies for reaching this understanding”.
This unfolding occurs in a scenario where Argentina faces significant increases in fuel prices throughout the year, following a trajectory of 63% in relation to accumulated inflation up to July.
The gap between the local price of a barrel of oil and the international price of Brent continues to widen, exacerbating pressures on consumers and the economy.
The Argentine fuel sector, although unregulated, is largely influenced by the YPF, the central benchmark for naphtha and diesel prices.
However, the recent move by companies not to wait for government negotiations demonstrates a change in market dynamics, with elections fast approaching.
The scenario remains uncertain, but for now, Argentine consumers can breathe a sigh of relief with the promise of stable prices on the verge of elections that will shape the country's political future.
The subsequent development will depend on the complex interaction between political and economic factors that drive the industry and, consequently, fuel prices in Argentina.
