Argentina May Suspend Oil Exports To Solve Shortage Problem

Argentina may ban oil producers from exporting any crude out of the country unless they ensure adequate local supply amid persistent fuel shortages.

The warning came from Economy Minister Sergio Massa, who is also running for president.

“If the fuel supply is not resolved by midnight on Tuesday, companies will not be able to send out export ships starting on Wednesday,” Massa told media, as quoted by Bloomberg. “Argentines’ oil belongs first to Argentines.”

Meanwhile, Reuters quoted government officials as saying the shortage will soon be eliminated a 10 cargoes of imported fuel are set to arrive soon. Distributing the fuel will take a few days, the country’s Energy Minister told local media, but it should solve the shortage problem.

The fuel shortage developed earlier this month, with local media in the face of the Buenos Aires Times attributing it to a dollar shortage that has prevented the government from securing enough import fuel, causing long lines at gas stations and closing some as they ran out of fuel.

Energy Minister Flavia Royon, however, attributed the shortage to stronger tourist activity last week as well as rumors about higher fuel prices following the next elections, which are taking place on November 19.

"It generated a psychosis of 'you have to go and fill up the tank'," Royon said, as quoted by Reuters.

Energy companies active in Argentina confirmed this by saying the shortage was the result of "excessive demand caused by the expectation of a shortage."

The companies, including state-owned YPF, Raizen, Trafigura, and Axion Energy said in a joint statement fuel supply will be normalized in the coming days.

Argentina produces 80% of the fuels it uses and imports the remainder. The country has been plagued by massive inflation, which has reached 140%, and is under threat of recession.

By Charles Kennedy for Oilprice.com

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