Chile weighs fuel price intervention as oil hits $100 per barrel

Oil prices surged past US$100 a barrel this week, driven by the escalating conflict in the Middle East and damage to refineries. The spike is expected to push Chilean gasoline prices above $100 per litre.

Finance Minister Jorge Quiroz announced that the Treasury is evaluating the use of the Fuel Price Stabilisation Mechanism (MEPCO) to mitigate the increase, possibly adding a variable negative component to offset part of the rise. Economists forecast a wide range of outcomes: some see prices climbing beyond $100 per litre, while others estimate increases of $30‑$50. The fiscal cost of any subsidy could exceed US$100 million per week.

The debate centres on whether public funds should be used to subsidise fuel amid reconstruction efforts after recent storms, with critics arguing that subsidies mainly benefit higher‑income households.