The easing of tensions in the Middle East has had an unexpected effect on the Argentine economy: the international price of oil has plunged nearly $20 in 10 days, from around US$95 to US$74 per barrel (Brent), and this relief could reach Argentines’ pockets sooner than expected.
According to industry sources, if the decline holds, the effect could be passed on to gas pumps within the next 25 days. The timing is significant: Javier Milei’s government needs wages to regain purchasing power and for that recovery to start driving mass consumption.
A reduction of around 20% in gasoline prices—consistent with Brent at around US$70 per barrel—could subtract about 0.9 percentage points from inflation in the month the cut is applied. This figure takes on greater dimension in the current context: the market expects inflation starting at 2.1% monthly and declining month by month. If by the time of the adjustment core inflation is already running below 2%, the overall index could approach 1%.
The impact, however, may not be linear. One possibility is that the reduction is staggered, diluting the effect over time. Another is that the government takes advantage of the moment to adjust taxes on liquid fuels—an adjustment that has been postponed to avoid worsening the inflationary impact of the March and April increases—which would absorb part of the benefit for consumers but improve the fiscal equation.
Additionally, a drop in gasoline prices would generate further positive effects in subsequent months: by reducing inflationary inertia, some prices that are updated based on the previous month’s inflation—such as prepaid medicine or public services—would also benefit.
The mechanism explaining the lag between the crude oil drop and pump prices has a name: buffer, or shock absorber, as coined by YPF’s President and CEO, Horacio Marín. When Brent surged from the start of the war on February 28, YPF chose not to pass on the entire increase to the pump. It applied two consecutive price freezes—45 days from March 31 to May 15, and another 30 days from May 13 to June 15, with a symbolic 1% increase in between.
Of the total oil price spike, which accumulated a 67% rise since January with peaks of up to US$118 per barrel, only 23% was passed on to fuel prices. The rest remained as a differential to be recovered, a variable the government is now watching closely given the possibility that external winds blow in its favor.
jajaja mira estos libercholos festejando la baja del petroleo como si milei tuviera algo q ver mientras los laburantes nos morimos de hambre la inflacion baja pero a costa del pueblo como siempre para mi esto es una estafa #PatriaOChauchas
kjjjj mira vos el petroleo se cae a pedazos y los zurdos llorando porque milei va a dejar la inflacion en 1% para mi estos no entienden nada viva la libertad carajo aguante milei los chorros anteriores nos afanaron todo ahora se viene el alivio