Argentina's Vaca Muerta shale play pumped crude oil to a record in May, cementing its status as the top shale basin outside the United States. But the boom remains largely confined to Neuquén province, while the rest of Argentina continues to face weak growth, high inflation, and falling consumer spending.
Argentina's Vaca Muerta shale play hit a production record in May, yet the milestone has failed to lift the country's wider economy. Crude oil output climbed to an all-time high of 887,227 barrels per day, up 19% from a year earlier, while the rest of the country remains stuck with weak growth and high inflation.
Vaca Muerta output keeps climbing
Natural gas told a similar story. Output rose to 5.5 billion cubic feet per day in May, just shy of the 5.7 billion cubic feet daily record set in July 2025. Gas production also climbed 5.4% from April and 11% from a year earlier. The shale patch has already made Argentina the fourth-largest oil producer in Latin America.
The energy industry has joined agriculture as a key driver of GDP growth. Yet outside the shale patch, public consumption, investment, and consumer spending have all declined this year.
Neuquén's wages outpace the rest of the country
The boom has turned Neuquén into what workers describe as Argentina's version of Texas. The average monthly salary in the province's oil and gas sector runs about $5,600, three times the $1,800 average in Buenos Aires, according to Reuters. According to Reuters: "Today we have two Argentinas, one Argentina that grows and another that falls."
Spillover into the wider economy remains unproven
Outside Neuquén, companies are folding and jobs are disappearing amid weak demand and falling investment. President Javier Milei's government is counting on Vaca Muerta and mining to prop up the broader economy, but analysts remain doubtful of quick results.
Economists writing in Economics Observatory framed the challenge as whether new export sectors can generate enough spillover for the rest of the economy, and do so quickly enough. Whether that growth becomes broad and visible enough may hinge on next year's elections.
Source: Oilprice.com
Trading involves risk.
Risk Disclaimer
