Trump's Strait of Hormuz blockade threat sends Chile's peso to year-high, oil surges.

President Donald Trump's announcement of a reinstated naval blockade on the Strait of Hormuz sent shockwaves through global markets on Monday, hitting Chile with particular force: Brent crude jumped nearly 10% to US$82.74 per barrel, the exchange rate climbed almost nine pesos to close at a new yearly high, and the IPSA fell 1.16% to 10,928.26 points, piercing the psychological 11,000 threshold it had only just reclaimed the previous week. For a country that imports more than 95% of the oil it consumes and that already experienced a historic surge in fuel prices when the barrel brushed US$120 following the outbreak of the conflict last February, the escalation at Hormuz is no abstract risk: it is a direct threat to domestic inflation, household purchasing power, and the margins of companies with heavy energy exposure.

The trading session laid bare that vulnerability with surgical precision. LATAM Airlines led the decliners within the index with a 5.18% plunge, followed by CMPC with a 2.8% drop — two companies whose cost structures are directly tied to fuel and energy prices. The dollar, further propelled by a massive bet by foreign investors against the peso according to Diario Financiero, is thus accumulating pressures that complicate the Central Bank's task in a context where June inflation already surprised to the upside. Bank of America, which projects Chile's GDP accelerating to 3% in 2027 on the back of reconstruction spending, likewise warned of the possibility of a near-term rate cut if the labor market continues to deteriorate — a scenario the new inflationary pressure from oil could significantly complicate.

Domestic energy strain compounds the picture. Colbún CEO José Ignacio Escobar reaffirmed that "the energy situation is still very tight," noting that the National Electric System has been operating with thermal plants covering close to 80% of demand, ahead of an imminent preventive rationing decree. In that context, every additional dollar on the barrel translates directly into higher generation costs and pressure on tariffs. The paradox is no small matter: Chile is simultaneously approving large-scale renewable investments — the Committee of Ministers greenlit nearly US$3 billion in projects this week, including a Codelco megaproject — while 80% of its lights depend on plants burning imported fuels whose prices have just soared. A Chilean-French alliance also filed with the SEIA the Central de Bombeo Atacama project, valued at US$900 million, with 450 MW of capacity and 3,600 MWh of storage in the commune of Caldera, a signal that private capital continues to bet on long-term solutions to the country's energy fragility.

Against that backdrop, BCI's brokerage arm raised its year-end 2026 IPSA target to 12,050 points — up from 11,900 — anchored on corporate earnings growth. The optimism contrasts with today's session but reflects a medium-term read that factors in the eventual approval of the government's mega tax reform, which advanced Monday from the Senate Finance Committee to the floor. The reform, approved on party lines by a three-to-two vote, establishes a tax invariability regime by tranches: ten years for investments between US$50 and US$100 million, fifteen years for the tranche between US$100 and US$350 million, and twenty years for those exceeding that figure, with an additional 1.5% surcharge on the first-category tax. The corporate rate is set at 23%, down from the current 27%, which SOFOFA estimates could generate between 80,000 and 210,000 additional jobs over four years under various growth scenarios.

The legislative path, however, is beset with political turbulence. The rupture with PPD senators — who negotiated the tranche scheme but whose party ultimately rejected the accord — led party chairman and deputy Raúl Soto to publicly question the tenure of Finance Minister Jorge Quiroz, branding him "the worst-rated minister, the one who generates the most distrust." Quiroz, for his part, shut the door on any fuel tax cut as a political bargaining chip, and the left-wing opposition announced it will file with the Constitutional Court against the invariability provision. The floor vote is scheduled for Wednesday. Meanwhile, the Chilean Association of Municipalities is demanding that compensation for the property tax exemption for those over 65 be enshrined in law with explicit mechanisms and verifiable timelines, warning that it will not accept partial formulas that erode the Common Municipal Fund.

Mining offers the strongest counterweight to the uncertainty. Projects submitted to the Environmental Impact Assessment System in the first half of the year total US$19 billion, a figure higher than the annual close of any of the past ten years, according to consultancy Plusmining. Among them stand out Minera El Abra's US$7.5 billion expansion and Escondida BHP's new concentrator plant at US$5.15 billion, as well as Albemarle's US$3.1 billion DLE project. Jorge Gómez's debut as CEO of Codelco — with a program centered on safety, operational stability, and management discipline — comes, nonetheless, under the shadow of a labor lawsuit filed by former Budget manager César Márquez, who is seeking more than $1.4 billion and pointing directly at former board chairman Máximo Pacheco and former CEO Rubén Alvarado over the irregular accounting of nearly 27,000 tons of copper in 2025 production. The case threatens to become a reputational drag on the corporation at the very moment its new leadership is trying to project an image of order and reliability.

What will set the tone in the coming days is the convergence of three variables: the Senate floor vote on the mega reform on Wednesday, with sufficient votes but a fragile political climate; the release of U.S. inflation data on Tuesday, which will determine whether the Federal Reserve can resume a dovish tilt; and the evolution of the Strait of Hormuz conflict, whose intensity over the coming days will decide whether the oil spike is a transitory shock or the start of a new phase of pressure on domestic prices. For Chile, all three answers matter equally.

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**Codelco (state-owned, no direct international listing)** — Jorge Gómez took office as president