In the months following Repsol's acquisition of Yacimientos Petroliferos Fiscales S.A. (YPF), energy prices continued their supporting volatility, but this time with upward adjustments. In March 2000, oil prices rose to $34 a barrel, their highest level since the Gulf War and well above Repsol's forecast a year earlier. The timing was fortunate: YPF's operations would generate greater profit owing to its strength in exploration and production-those gains would more than offset any possible losses in Repsol's downstream refining and marketing activities. However, the surge in oil prices might trigger an increase in inflation, interest rates, and Repsol's cost of capital.