Oil plunge reorders Chile's fiscal debate amid climate disaster and copper supply fears.

The sharp drop in oil prices — with Brent tumbling more than 7% to US$89.43 a barrel following the pause in hostilities between the United States and Iran — is reshaping Chile's financial landscape this morning at a moment when the country is simultaneously grappling with a climate catastrophe of major proportions, a low-intensity political crisis at the Finance Ministry, and an increasingly urgent fiscal debate over economic reactivation.

The geopolitical relief in the Middle East arrived after nearly two weeks of escalation. Iran signaled it would suspend offensive operations to the extent that Washington maintains its pause on bombings, a stance the U.S. ambassador to the United Nations described as an opening for diplomacy. The immediate effect was mechanical: the dollar index retreated 0.1%, benchmark global interest rates eased, and the Chilean peso opened the week under moderate appreciation pressure. Copper traded in London advanced 0.9% to US$6.25 per pound, partly benefiting from lower global risk aversion, though the red metal's narrative in Chile this week is being dominated by another variable: the historic storm that disrupted mining operations in the Atacama and Coquimbo regions, raising international concerns over supply at a time when demand tied to AI infrastructure has kept structural interest in copper elevated. Barrick Gold completed the evacuation of workers from its Barriales camp in Alto del Carmen and kept a helicopter on standby for authorities, while the extent of damage to regional infrastructure was still being assessed.

Bi-ministerial head of Public Works and Transportation Louis de Grange estimated reconstruction costs at between US$500 million and US$700 million, with 358 roads affected, 17 bridges out of service, and 308 rural potable water systems suspended along an arc stretching from Atacama to La Araucanía, with its epicenter in Huasco and Coquimbo. The Chilean Chamber of Construction, for its part, had already warned in its *Infrastructure for Sustainable Development 2026–2035* report that Chile will need to invest close to US$1.13 billion in resilience infrastructure over the next decade. The storm only confirms that this figure could fall short if project design fails to incorporate climate risks as a structural variable from the outset rather than as a contingency. The Coquimbo region bore the greatest immediate commercial damage: a report by Almacenes Digitales and the Santiago Chamber of Commerce showed that the majority of storefronts reported sales declines, with the caveat that deterioration could intensify in the coming weeks.

On the political-fiscal front, the government of José Antonio Kast faces a week of critical decisions extending well beyond the climate emergency. The Cadem poll placed presidential approval at 37%, with disapproval reaching 59%, while the Criteria survey registered even more adverse figures: 36% approval against 54% rejection. Finance Minister Jorge Quiroz ranks among the worst-rated cabinet members with just 34% approval, though paradoxically he is perceived as the most influential figure on the economic team. The deterioration in citizens' economic expectations arrives at the worst possible moment: between August 3 and 14, the Finance Ministry must launch the priority-setting phase of the 2027 Budget — the first under the new medium-term financial programming paradigm that the ministry itself has heralded as a methodological break from historical practice. Adding to the picture is the political complication triggered by the removal of former Deputy Finance Minister Juan Pablo Rodríguez following a positive drug test result, though Segpres Minister José García Ruminot left the door open to his reinstatement should the counter-sample return negative, emphasizing that the official's technical career enjoys broad recognition within the government.

The Finance Ministry's Tax Policy Coordinator, Sebastián Vallebona, welcomed the progress of the omnibus tax bill and projected its enactment for late August, framing it as a win for the executive insofar as it preserved the core of the tax reform. Yet SOFOFA has spent weeks intensifying pressure in the opposite direction: the industrial federation published an analysis quantifying that a four-percentage-point cut to the corporate income tax — from 27% to 23% — could generate between 80,800 and 210,000 additional jobs over four years, invoking the Marfán Commission's estimate that the cumulative rise in the corporate tax rate since 2000 has cost the country roughly 8 percentage points of GDP. In parallel, SOFOFA unveiled a five-point labor agenda that includes replacing the severance-by-years-of-service system with individual accounts managed by the AFC and universalizing the childcare benefit. The tension between the fiscal need to raise revenue and business-sector pressure to reduce the corporate tax burden frames the underlying Chilean economic debate, with unemployment at 9.4% during the March–May quarter serving as the backdrop that lends urgency to both sides of the argument.

The Central Bank's reserve accumulation program, launched in August 2025, this week surpassed US$5.358 billion purchased under the scheme of up to US$25 million per day, with a target of US$18.5 billion over three years. The exchange rate closed Friday at $948, its highest level since last October, having risen $48.85 so far in 2026. Itaú Chile's chief economist, Andrés Pérez, dismissed the notion that the program itself is generating exchange rate pressure, though he noted that upcoming sovereign debt issuances in foreign currency — which the Treasury will need to sell in the local market to finance the deficit — should contribute to a moderate appreciation of the peso.

What lies ahead warrants simultaneous attention on multiple fronts: the Federal Reserve's decision this week will be the central external catalyst, with markets calibrating whether the relief in oil prices does or does not shift the Fed's inflation equation. Domestically, the enactment of the omnibus tax bill in August and the formal launch of the 2027 budget cycle will set the fiscal tone for the second half of the year. And the monitoring of mining operations in the storm-affected zones will be decisive for July copper output — a data point that global markets, along with supply analysts tied to AI demand, will be watching with unusual attention.

**Barrick Gold (NYSE: GOLD)** — The miner completed the evacuation of all its workers from the Barriales camp in Alto del Carmen, Atacama region, following the historic storm that struck northern Chile. The company ruled out a shift change at the site and kept a helicopter on standby for author