Iran conflict drives fuel shock, derailing Chile's new president

José Antonio Kast assumed the Chilean presidency on March 11 with a commanding vote share and a net approval rating of about 20 points. Within two weeks, the Iran war, launched by Donald Trump at the end of February, sent global oil prices soaring, exposing Chile's vulnerability as one of the region's largest oil importers. The modest fuel-stabilization fund proved inadequate, and weekly subsidies for gasoline approached $150 million, prompting the government to abandon price caps and shift the burden to consumers.

Between March and April, gasoline prices rose nearly 40 percent, inflating costs for food, manufactured and imported goods, while unemployment hit 9.4 percent and the central bank cut growth projections to between 1 and 1.75 percent. Kast's approval slipped into negative territory, and despite pushing a “megareform” that lowers corporate taxes and incentivizes investment, the reforms are unlikely to restore his popularity in the short term. The ongoing Iran-U.S. standoff over the Strait of Hormuz suggests high oil prices will continue to challenge Kast’s first year in office.