The conflict between Iran x Israel-Ita has raised tension on the oil quote, because the discharge in commodity can reach the price of fuels and affect the Brazilian’s pocket. This can occur because Brazil, although extracting a lot of oil, does not produce enough fuel and needs to import refined product to supply the domestic market, placing the country at the mercy of the international price.
The conflict in the Middle East places magnifying glass on these fluctuations and possible impacts in Brazil. In addition to the quotation of oil itself, the cost of transportation, which is mostly road and dependent on fossil fuels. This can cause a ripple effect on the economy and impact inflation with increased costs in general.
JPMORGAN calculates that inflation rises 0.2 percentage point every 10% of oil liftingconsidering the weight of gasoline, ethanol and diesel in the index.
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“We were in a trend to reduce inflation, and this will probably impact not only the direct inflation of fuel increased consumer products basket, but also on indirect inflation, via increased freight cost, if Petrobras passes on the costs,” says Alexandre Jorge Chaia, insper finance teacher.
Why conflict press oil?
Although the dispute is miles away from Brazil, it occurs near the Ormuz Strait – a sea passage through which it flows from 20% to 30% of world oil consumption.
On Saturday (21), The US entered the conflict And they attacked Iran’s nuclear facilities, climbing the tension. On Sunday (22), The Iranian Parliament approved the closure of the Strait of Ormuzbut the action still depends on the endorsement of Ayatollah Ali Khamenei, the country’s supreme leader. While the international route remains open, the oil quotation remains vulnerable.
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“If this scenario happens [de fechamento do Estreito]the most conservative projections give the oil barrel surpassing the $ 100 range. The most extreme scenarios already project at $ 150, which would have a great impact on the global economy. Today, he is being priced between $ 76 and $ 78, ”explains Jorge Ferreira, Professor of Administration at ESPM and an international economy specialist.
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Extra attention in the oil barrel
The quotation of oil impacts fuel prices in Brazil, either in direct derivatives, such as gasoline and diesel, or in ethanol, made from sugar cane.
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Petrobras, being a company with investors, follows market rules in price policy. Currently, the company has as its policy not to pass on to the consumer all the fluctuation of the oil barrel price.
“Petrobras, being a fuel company, has to follow international rules. But Petrobras’s current policy is to cushion in price variation. It supports the damage for a while, or keeps profit for a while before it starts to reduce. These adjustments are slower than the speed of fuel increase,” Chaia explains.
In Ferreira’s assessment, at some point this transfer will have to happen, as the oil quote accumulates high of 21% in June alone.
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“If the Ormez Strait is closed, it is virtually impossible for Petrobras not to transfer,” he says. “In the current scenario, where the oil barrel is already at a higher cost, Petrobras should take a few days or weeks to pass. But in the locations where the supplier is a private company, as in the North and Northeast, the transfer must have already felt over the coming days,” he says.
In addition to gasoline and diesel, this variation also carries the price of ethanol. “When gasoline rises, ethanol tends to follow to maintain its competitiveness. Producers and distributors try to adjust a little on the margin by following the price of gasoline to make a slightly better result,” he says.
Transport Impact
Another point to consider is that, with a majority transport matrix, the economy in Brazil tends to be greatly impacted by the variation in oil prices. Thus, if the price of fuel rises, the prices of freight also go up.
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According to Ferreira, diesel represents 50% of the operating cost of Brazilian carriers. In the case of air transport, almost 50% of the cost is also related to aircraft fuel.
“The increase in the cost of fuels reflects the cost of transportation, which will influence industrial and agricultural production, which is transported in Brazil largely by highways. This will press the IPCA Yes, surely,” says Ferreira.
