Fuel prices in Chile are set to rise again starting April 16, according to a new report from the Latin American Center for Economic and Social Policies (Clapes UC).
The analysis indicates that diesel will face the most significant price hike. This follows a period of volatility in both the global oil market and the domestic exchange rate.
Researchers at Clapes UC pointed to recent geopolitical tensions as a primary driver for the upcoming adjustment. The escalation of the conflict between the United States and Iran in March contributed to higher crude oil costs.
"The conflict between the U.S. and Iran escalated in March, generating an increase in the exchange rate and the price of oil," the study notes. While a recent truce has slowed the upward trend, the pricing mechanism still captures the March price spikes.
Currency volatility drives costs
The Chilean peso experienced notable instability throughout the last month. The exchange rate consistently stayed above 900 pesos per dollar during March, reaching a high of 932 pesos on March 31.
The rate eventually retreated to 894 pesos by April 10. However, the window used to calculate current fuel prices still includes the higher costs from the March surge.
As a result, gasoline is projected to increase by $36.5 per liter. Diesel, however, is expected to see a much larger jump of approximately $63 per liter.
Francisca Cuadros, an economist and researcher at Clapes, noted that international market dynamics are penalizing diesel more heavily.
"This is due to the greater increase in the price of this fuel in international markets, compared to gasoline," Cuadros explained.
The current price trajectory is also heavily influenced by the Fuel Price Stabilization Mechanism (Mepco). This government tool has mitigated what would otherwise be much more drastic price swings.
The Clapes UC analysis suggests that without Mepco, the impact on consumers would be much more severe. Gasoline would have risen by $73 per liter, while diesel would have seen an increase exceeding $100 per liter.
The report highlights that the recent reduction in the exchange rate does not yet offset the previous month's highs. The calculation period for the April 16 adjustment remains heavily weighted by the March peaks.