Chile imports virtually all fossil fuel requirements, making domestic prices entirely dependent on international markets and exchange rate fluctuations. ENAP refines the majority of domestic crude supply, though a minority share arrives as refined products. The pricing system references international crack spreads rather than ENAP’s actual refining costs to prevent potential inefficiencies from being transferred to consumers in the absence of competitive benchmarks. When ENAP’s refining costs fall below international reference points, the company captures margin gains; when costs exceed benchmarks, operational losses result in the refining segment.
Minister Quiroz explained diesel has recovered to pre-crisis pricing while gasoline remains elevated because global refining capacity disruptions have widened the differential between crude and refined gasoline products. The gap persists despite crude prices retreating from peak levels. Economist Carlos Smith from Universidad del Desarrollo noted the crack spread methodology prevents ENAP from price-setting based solely on internal cost structures that lack competitive validation. The fuel crisis contributed to President Kast’s declining approval ratings amid broader economic contraction spanning five consecutive months and unemployment reaching 9.4 percent, the highest rate in five years. Despite the announced price reductions, volatility returned to markets following President Trump’s announcement terminating the Iran ceasefire, pushing Brent futures above $78 per barrel with increases exceeding five percent.
This article was curated and published as part of our South American energy market coverage.
