Argentina's state-controlled oil company YPF sees it difficult for the sector to fully track rising international prices, Chief Executive Sergio Affronti said, citing global geopolitical tensions and a local economic crisis.
Crude oil hit its highest level in a decade this week and prices are set to post their strongest weekly gains since the middle of 2020, with the U.S. benchmark up more than 21% and Brent up 17%, amid fears over disruption to Russian exports in the face of Western sanctions after Russia invaded Ukraine.
"We expect to continue adjusting prices at the pump in a sustainable way to counter the effects of the depreciation of the (Argentine) currency while also aiming to reduce - at least partially - the spread between local and international prices," Affronti said during a conference call with analysts.
"However, we shall remain conscious of the Argentine economic reality, that will probably make it difficult for our sector to fully track rallying international prices," he added.
Argentina, which is still recovering from a three-year recession, keeps local energy prices unlinked from international quotes in an attempt to rein in high inflation, which was over 50% in 2021. A similar surge in prices is expected this year.
YPF on Thursday posted a $247 million quarterly net profit, down 54% year on year, as it was not able to fully pass global prices onto local customers.
Analysts at Itau BBA said the result was neutral but that 2021 was a "good year" for the company, highlighting downstream volumes and price performance - except at the retail pump.
"With better upstream operationals and demand recovering to pre-pandemic levels, the main question remains how YPF will be able to defend and raise prices at the pump in U.S. dollar," they said.
