Chile has announced a sharp increase in fuel prices as surging global oil costs strain the country’s finances. Gasoline prices will jump from about $1.30 per liter to $1.70, while diesel will rise from $1.00 to $1.70, marking a significant shift from the government’s previous price control mechanism.

The move comes as oil prices climbed from $70 to $110 per barrel בעקבות the war in the Middle East, heavily impacting Chile, which relies almost entirely on imported oil. President Jose Antonio Kast said the subsidy system was costing the government about $140 million per week and was no longer sustainable amid tight fiscal conditions.

Officials said the increase is intended to align domestic fuel prices with international levels and address a fiscal deficit of 3.6 percent. Economists warn the hike will push inflation higher, with the strongest effects expected in April. The government has introduced measures such as freezing public transport fares and offering monthly subsidies for taxi drivers to soften the blow on consumers.