Argentina’s economy ministry will freeze domestic crude oil prices at $56 per barrel until the end of October afteran agreement with the industry, tohelp tamp down triple-digit inflation, two oil sector sources said on Friday.

The agreement came after meetings on Thursday between Economy Minister Sergio Massa and executives from oil companies such as YPF and Vista. The government had also announced a freeze on domestic fuel pump prices.

The price cap, amid wider domestic inflation at 113% and rising, sets the local crude oil barrel price below the $63 it had been before and well below the Brent crude benchmark now at about $85. Argentina has long controlled the domestic oil price.

The two sources told Reuters on Friday that the local industry, which produces oil and gas largely from Argentina’s huge Vaca Muerta shale formation in the country’s Patagonian south, had agreed to a fixed price until Oct. 31.

“We understand the situation and we have reached an understanding,” said an industry source, asking not to be named. “It is a measure of extreme necessity and urgency.”

The South American nation has been battling against sky-rocketing annual inflation which topped 113.4% through July, with monthly inflation set to rise higher in August after a shock primary election result led to a sharp peso devaluation.

Argentina’s energy secretariat did not immediately respond to a request for comment on the crude price fix.
Source: Reuters (Reporting by Eliana Raszewksi; Editing by Adam Jourdan and Marguerita Choy)