The armed conflict in the Middle East and the resulting disruption of global trade flows through the Strait of Hormuz have triggered a turning point for the economy of Latin America and the Caribbean (LAC). According to our latest report, the region\u2019s monthly energy inflation rose sharply in March 2026, reaching 1.42%. This figure represents a significant jump from 0.19% in February and marks the highest level recorded in the past twelve months, driven by escalating tensions along a route through which 20% of the world\u2019s oil supply transits, pushing international crude prices up to USD 116 per barrel.<\/p>\n
Our analysis shows that, despite having a highly renewable electricity generation matrix, the region remains structurally dependent on oil and its derivatives. This vulnerability translated into an average regional increase of 21% in diesel prices and 15% in gasoline prices, with domestic price ranges between USD 0.70 and USD 2.07 per liter of gasoline, and between USD 0.80 and USD 1.65 per liter of diesel.<\/p>\n
The impact of this energy shock acted as a transmission mechanism across the economy, increasing logistics costs, transportation expenses, and food prices. As a result, the region\u2019s overall monthly inflation rate doubled, accelerating from 0.38% in February to 0.75% in March, also reaching its highest level in the last year.<\/p>\n
The report highlights an asymmetric impact across the region, where net oil-importing countries have faced severe fiscal pressure, while exporting nations have benefited from short-term extraordinary revenues, although they remain equally exposed to market volatility.<\/p>\n
At the same time, while some countries allowed a greater pass-through of international oil price increases to consumers, others resorted to subsidies, tax reductions, stabilization funds, or partial containment mechanisms. As a result, the transmission of the energy shock to headline inflation was not complete, thanks to the diversity of cushioning policies in place.<\/p>\n
The scale of the March shock demonstrates that intense geopolitical disruptions can overwhelm local containment mechanisms, showing that although the relationship is not \u201cone-to-one\u201d due to state interventions, the upward transmission of price trends has become increasingly unavoidable.<\/p>\n
Through this regional monitoring, OLACDE reaffirms its fundamental role as the technical reference for understanding economic dynamics and the challenges of energy integration, security, and development in Latin America and the Caribbean.<\/p>\n