The Buenos Aires Herald reported that Argentina's major oil-producing provinces have threatened President Javier Milei to cut off oil supplies nationwide if he opts to diminish funding and retain billions in federal tax revenues. 

This comes after Milei's government illegally retained 13.5 billion pesos ($15.3 million) in monthly tax revenue transfers from the key crude-producing province of Chubut, according to its governor, Ignacio Torres.

“Not a drop of oil will come out on Wednesday if they don’t respect the provinces once and for all and take their foot off our back,” Torres told the CN5 broadcaster on Saturday.

However, Argentinian Economy Minister Luis Caputo said it was a method to take back years' worth of taxes that Chubut and nine other provinces have not paid. 

Governors threatened with jail

Torres was backed by other governors, and warned that if Milei proceeds with his decision, 600,000 people would be affected in Chubut as it “impacts on their right to education, health, security, and development.”  

In response, Milei threatened Torres and other governors with jail sentences if they obstruct oil supplies to the country, calling them "fiscal degenerates".

However, the situation brought forth doubts among economists regarding Argentina's ability to compromise between its oil production and supplies that affect the national and international markets, as the country ranks 39th among oil-producing countries, and the 20th largest natural gas exporter. 

After the fallout in oil-producing provinces, market analyst Artemio Lopez said Milei "miscalculated" the consequences of his policies. He said interparliamentary conflicts are entirely different than those with governors, noting that most of them got higher vote percentages than he did in the last elections. 

Read more: IMF urges Milei to shield the poor amid harsh austerity measures

'Hunger doesn’t wait': Argentines protest stringent austerity measures

Since his incumbency, Milei was denounced for his administration's stringent fiscal policies, more so after the adoption of austerity policies that have cut subsidies from the transportation sector. As a result, transportation costs have skyrocketed, with bus ticket rates more than tripling, and the government has discontinued crucial aid to soup kitchens which serve a rising number of people in need.

Protests erupted around Argentina, demanding food aid for the poor in reaction to the negative impacts of increasing prices and the implementation of President Javier Milei's strict austerity policies.

Milei, who assumed office in December amid public outrage over decades of economic mismanagement, had cautioned that Argentina's struggle with inflation was ongoing. Last week, he reaffirmed his commitment to his policies.

Alejandro Gramajo of the UTEP union told AFP that in over two months, the government managed to create a "very critical situation of poverty."