Oil companies are preparing a 5% fuel price increase and are putting pressure on the national government over inflation.

The country's major oil companies are considering implementing a new 5% increase in gasoline and diesel prices in the coming days. The increase is due to the rise in international crude oil prices, caused by the recent outbreak of the armed conflict between Israel and Iran.

Industry sources warn that local prices are 15% to 18% behind international prices, and that the intention is to move forward with gradual increases to avoid a sudden jump that would destabilize the market.

Since the beginning of June, the price of a barrel of Brent crude—the benchmark for the Argentine market —has risen from US$63 to US$76, accumulating a variation of more than 20% . This movement complicates the plans of thenational government , which has been consolidating a sustained decline in monthly inflation, thanks in part to price containment in key sectors such as fuel.

“ The international context has changed, and we can't keep postponing the adjustment. We need to rebuild margins ,” admitted a private refinery executive. Other companies, such as Raízen (Shell) and Axion, are also considering phased price increases.

In May, inflation reached 1.5%, breaking below the 2% monthly threshold for the first time since the start of Javier Milei's administration. This record was made possible, among other factors, by a reduction of up to 8% in fuel prices during the same period.

A further increase in gasoline prices could have a direct impact on the consumer price index. According to estimates by the consulting firm EcoGo, every 10% increase in fuel prices impacts inflation by 0.42 percentage points . Thus, a 5% increase could add approximately 0.21 points to the next CPI.

So far this year, YPF has implemented more moderate price increases in the City of Buenos Aires, with increases ranging from 0.5% for premium diesel to 7% for premium gasoline. This policy helped maintain benchmark prices and differentiate itself from private oil companies, which took advantage of their greater flexibility to adjust rates and improve profitability.

Executive sources indicated that tools are being evaluated to prevent these increases from interrupting the downward trend in prices, without affecting the competitiveness of the energy sector.

Despite the inflationary risk, the rise in crude oil prices also offers a collateral benefit to the energy balance. Every dollar increase in the price of a barrel represents an annual improvement of US$80 million in the trade balance , given that Argentina currently exports more than 220,000 barrels per day.

Vaca Muerta revenues are consolidated as one of the pillars of the external surplus, and help sustain demand for dollars for tourism and services without jeopardizing exchange rate stability.

"The government faces the challenge of managing this tension between domestic costs and external revenues without losing focus on macroeconomic stability," warned economist Sebastián Menescaldi of EcoGo.