MercoPress. South Atlantic News Agency

Uruguay raises fuel prices 7% over Middle East war and shifts to monthly price-setting

Under the adjustment, Super 95 gasoline will rise from 76.88 to 82.27 pesos per liter, while 50S diesel will increase from 47.32 to 50.63 pesos per liter

Uruguay's government announced on Friday a 7% fuel price increase effective April 1, as a direct consequence of rising oil prices driven by the U.S.-Israeli war against Iran and the effective closure of the Strait of Hormuz, through which approximately 20% of the world's crude oil supply transits.

Oil prices surpassed $110 per barrel in March, up from around $70 in late February — a jump of over 30% in just weeks. Facing the volatility, the government also decided to shift from bimonthly to monthly fuel price adjustments.

Economy Minister Gabriel Oddone explained that without the 7% adjustment cap, increases would have been significantly higher: 13% for gasoline and 44% for diesel. “This is a mitigation strategy until we fully understand what is happening,” Oddone said at a press conference alongside Industry Minister Fernanda Cardona.

Under the adjustment, Super 95 gasoline will rise from 76.88 to 82.27 pesos per liter, while 50S diesel will increase from 47.32 to 50.63 pesos per liter. LPG will go from 88.46 to 94.65 pesos per kilogram. The government noted that fuel increases across the region ranged between 15% and 60% during March.

Oddone described the situation as “extraordinary” and compared it to Iraq's invasion of Kuwait in the 1990s. “We have not had oil market disruption events since the 1970s. This bears no comparison even with what happened in 2022 with Russia's invasion of Ukraine,” he stated. Minister Cardona added that the International Energy Agency classifies the current crisis as the largest crude supply disruption since 1973.

The adjustment is authorized under an exception clause in decree 130/025, which allows the executive branch to deviate from the standard pricing mechanism during extraordinary market conditions.

Alongside the increase, the government announced a mitigation package. A soft credit instrument will be created for agricultural sectors with a maximum amount of $30,000 and an interest rate subsidy of up to 50%. Benefits under the SIGA Agro guarantee system will be extended with reduced commissions, and the state bank will allow financing terms to be extended by 12 months. The tax authority will extend the diesel VAT refund period to 12 months for agricultural taxpayers.

The government clarified that the diesel increase will not affect public transportation fares, as the difference will be absorbed by the Sustainable Mobility Trust Fund. Ancap, the state fuel company, made advance crude purchases to secure supply, and the Economy Ministry authorized new credit lines totaling up to $220 million to cover its financial needs.