The Return of the Dead Cow

• Alexis Bienvenu
  Fund Manager
  La Financière de l’Échiquier (LFDE)

Alongside the major exporters benefiting from this crisis, such as Brazil, Russia and the United States, another country could be profoundly transformed by the situation in the Persian Gulf: Argentina. A country which, in turn, could itself help reshape the global energy system. 

The country where the god of football plays with his hands enjoys another blessing: the Dead Cow. Not the one for which the local meat is famous, but the ‘Vaca Muerta’, a region of Patagonia which, according to the US Energy Information Administration (EIA), harbours world-class hydrocarbon deposits: the world’s fourth-largest reserve of technically recoverable shale oil and the second-largest of shale gas. For a country that has been battling economic decline for decades, this situation is nothing short of a miracle.

Rising oil prices are already having an impact on the country’s economy: energy exports, which have been in surplus for the past two years, are soaring. In March, according to a JPMorgan note cited by Bloomberg, the energy balance reached a historic high. The central bank can finally replenish its dollar reserves. One sign is unmistakable: the peso, traditionally on a downward trend, has appreciated by nearly 6% against the dollar this year.

The Argentine head of state is driving this development forward, having enacted a wide-ranging programme of environmental and economic deregulation upon taking office in late 2023. In 2024, the RIGI scheme (Régimen de Incentivo para Grandes Inversiones) reinforced this approach by encouraging foreign investors to develop the energy and mining sectors. The recent reform of Argentina’s Glacier Law, primarily targeting mining extraction, completes this shift.

As with other exporting countries, including the United States, the economic gains are, however, not entirely clear-cut. Inflation, which had fallen sharply since Javier Milei came to power, is rising again, expected to reach around 29% in 2026. Admittedly, this is a moderate level compared to recent years, but it falls short of Argentinians’ hopes, whilst growth forecasts have been revised downwards to 3.3% for 2026 (according to the Bloomberg consensus).

Consequently, despite the goals scored by Milei in the oil, gas and agricultural sectors, the match of the upcoming presidential elections scheduled for December 2027 is far from won. According to the Latam Pulse poll, the president’s approval rating has thus just fallen to around 36%, its lowest since he entered politics.

But the president’s future is not the only thing at stake on the ‘Dead Cow’ field. The stakes extend even beyond Argentina. Indeed, part of the global economic system depends on the growth of the ‘Dead Cow’, as energy importers increasingly seek to diversify their supplies away from the Persian Gulf. Like other Latin American countries, Argentina holds the keys to the game. For whilst its oil production remains below 1% of global output, it is rising rapidly. The main challenge is transport. Pipelines are under construction, enabling a significant increase in oil exports from 2027 onwards. By 2030 and beyond, the country could find itself playing in the top league of oil and gas, helping to stabilise the global economy. The ‘Hand of God’, 40 years after Argentina’s World Cup miracle, is once again lifting the country up. But it has changed its appearance: it has taken the form of a Vache Morte.

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