Oil Surge Pushes Argentine Risk Premium Above 500 Points

The escalation in crude oil, propelled by Middle East tensions and the Russia-Ukraine war, deepened the selloff in sovereign bonds internationally and dragged down Argentine debt. In this context, country risk rose 16 basis points to 506 units, returning to levels seen in late August.

Crude surpassed USD 107 per barrel, while the physical market known as Dated Brent traded above USD 130. Operational disruptions linked to the Strait of Hormuz and challenges to oil infrastructure added pressure on supply and elevated maritime shipping costs.

The deterioration spread to major fixed-income markets. U.S. Treasury yields exceeded 5%, their highest level since April 2007, while European and Japanese securities also posted higher rates. The scenario reignited inflation expectations and kept focus on the Federal Reserve's interest rate decision.

In Argentina, sovereign bonds fell as much as 1% in trading. The Free Foreign Exchange Market saw USD 844 million traded, and the Central Bank purchased USD 14 million. The wholesale dollar fell one peso to $1,506.50, while the MEP closed at $1,561, cash with settlement at $1,597, and the blue market at $1,560.

The global surge in fuel prices also poses a challenge for Argentine public accounts. The decision to delay price increases to contain inflation limits VAT collection and revenue from specific taxes on those products.

Meanwhile, the Ministry of Economy unveiled the 2027 Budget bill, which projects 18% year-over-year inflation by December, an exchange rate of $1,847 per dollar by year-end, and GDP growth of 4%. Private economists deemed the inflation forecast achievable, though they noted the official economic expansion estimate appears more optimistic.