YPF Sociedad Anónima YPF, Argentina’s state-owned energy company, has announced that it will be lowering fuel prices across the country, starting from Oct. 1, 2024. The company announced a 4% reduction in gasoline prices and a 5% reduction in diesel prices. However, the pump prices will reflect a 1% reduction in gasoline prices and 2% in diesel prices. The devaluation of the Argentine peso and an increase in taxes led to a 3% rise in fuel prices, which partially reduced the full benefit of the price cut.

YPF’s Fair Pricing Strategy

YPF considers several factors before setting the prices, including local and international market dynamics as well as fuel production costs as it intends to stick to a fair pricing strategy for fuels. Per the company’s statement, the reduction in fuel prices is a reflection of the declining trend in the global Brent crude oil prices. The state-owned energy firm has reportedly lowered fuel prices for the first time since 2019.

Argentina has witnessed a cumulative 51% rise in gasoline prices so far. According to source, the year-over-year increase in gas prices stood at a staggering 340% in September. YPF has successfully struck a balance between local fuel prices and international prices over the past eight months, which should enable it to make future price adjustments based on international Brent crude prices alongside other local factors associated with costs.

Economic Challenges in Argentina

Argentina has been grappling with a high rate of inflation and instability in the value of its currency. As such, the reduction in fuel prices may have a significant impact on the economy. Easing up fuel prices by YPF should reduce the burden on Argentina’s consumers and its businesses by lowering transportation expenses. As Argentina's largest oil company, YPF's decision carries substantial weight and may influence other companies in the industry to do the same, benefitting consumers all over Argentina. 

YPF’s Zacks Rank and Key Picks

Currently, YPF carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the energy sector are PEDEVCO Corp. PED, Archrock Inc. AROC and VAALCO Energy EGY. PEDEVCO and Archrock presently sport a Zacks Rank #1 (Strong Buy) each, whereas VAALCO Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. PED stands to benefit from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States, as well as in the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations. Combined with bullish oil prices, this is expected to boost the company's production and overall profitability.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

VAALCO Energy is an independent energy company, involved in upstream business operations with a diversified presence in Africa and Canada and have a large inventory of drilling locations in the premium Acreage.

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