Argentina faces fuel shortage despite being oil-rich: Everything to know
Argentina, a leading producer of shale oil and gas, is reportedly facing an acute shortage of petrol and diesel. This has resulted in the closure of numerous fuel stations and caused long queues outside some that are still operating. Oil companies attributed this to domestic refining problems and insufficient funds for imports. However, Energy Minister Flavia Royon blamed the shortage on heightened tourist activity and rumors of higher fuel prices after the November 19 general election, which led to hoarding.
Why does this story matter?
The fuel shortage comes ahead of the second round of the Argentinian presidential election run-off next month. The economic minister in the ruling coalition government, Sergio Massa, is seen as the front-runner. Meanwhile, oil companies attributed the fuel shortage to planned halts at local refineries and import halts over scarce foreign reserves. Also, the government is looking to control inflation amid the fuel crisis. It has already fixed the local oil price at $56/barrel—far below the international price (around $86).
Argentina government expects resolution soon
According to Reuters, the Argentinian government is optimistic that the fuel shortage will be resolved shortly, as 10 cargos of imported petroleum are scheduled to arrive soon. Royon claimed it should improve the crisis, but the imported fuel might take a few days to be distributed. State-owned energy companies YPF, Raizen, Trafigura, and Axion Energy echoed his view. However, opposition parties have started agitating against the government amid the presidential election race between Massa and radical libertarian Javier Milei.
Diesel shortage affecting Argentina's farmlands
In Argentina's agricultural regions, the diesel shortage reportedly appears to be easing, which is crucial for the planting season of the nation's primary cash crops: soy and late-season corn. Argentine Rural Confederations (CRA) chief Jorge Chemes stated that while fuel supply was not entirely back to normal, there was an increase in availability. Reportedly, oil industry sources mentioned scheduled shutdowns at local refineries—responsible for 80% of local supplies—and limited foreign currency reserves as reasons for the shortages.
Government threatens to halt crude oil exports
Reportedly, Massa issued a warning to oil companies to resolve the domestic supply crisis by the end of Tuesday or face a suspension in crude oil export shipments from the Vaca Muerta shale formation. Meanwhile, Argentina's top fuel producers and refiners have proposed a plan to restore full supplies and increase stocks at gas stations. Local unions have supported Massa's stance and threatened a strike starting Wednesday unless the situation is resolved, accusing oil companies of being "opportunistic and petty."
