Opinion – Vinicius Torres Freire: What Arabs, Putin, Biden and Bolsonaro can do with their gasoline

Late in the European afternoon, Yusef al-Otaliba tweeted. The price of oil took another plunge. Al-Otaliba is the UAE’s ambassador to the US and a major political figure in his country. In the note accompanying the tweet, he wrote: “We are in favor of production increases [de petróleo] and we will encourage OPEC to think about higher production levels”.

And? The price of your gasoline may have to do with OPEC decisions, with rumors of a remote ceasefire negotiation in Ukraine, with the fact that the European Union wants to smooth its energy supply and with the political pressures of Joe Biden in the world of oil.

It may be that Jair Bolsonaro also has something to do with this, as he despairs when he sees that the price of fuel can make his reelection even more difficult. He’s been wanting to do something for a year, but he’s stuck like a mule, due to ignorance and political disarray, which is perhaps lucky. What’s more, the market swings may be nothing more than those movements of herds or shoals of sardines.

But even with a sudden peace, the oil market would remain in trouble for months. On the Friday before the start of the war (02/18), the price of a barrel had already increased 20% in the year, to almost US$ 94 (R$ 471, at the current exchange rate). That account is going to hit somewhere.

In the price of diesel and gasoline, in Brazil without adjustment since January 12. Or in the Treasury, if the government decides to give subsidies, increasing public debt. Or in Petrobras shareholders (among them the government itself, which would lose revenue from profits), not to mention the damage that a long pricing would cause in the market, reducing imports (with a risk of fuel shortages) or, in the medium term, investments.

The price of a barrel of Brent ended Tuesday at around US$ 128 (R$ 641). Before the tweet from the Emirates, it had dropped to US$ 120 (R$ 601), perhaps due to rumors that Ukraine and Russia could make an agreement (this Thursday, there is a meeting between the foreign ministers of the two countries, in Turkey). After the note came out (but not necessarily because of it), the price dropped until it closed at US$ 112 (R$ 561).

OPEC does not want to increase production much, in part because of an agreement with Russia, which has become a staunch ally of the cartel and which they do not want to let go of. Saudi Arabia and other Arab countries want US support in the Yemen war and don’t want Iran to go easy, among other diplomatic troubles. But the US is pressing, as it plans, in the medium term (end of the year?), to put on the market some extra oil from sanctioned Iran and Venezuela.

The Biden government also beats up his country’s oil tankers, especially shale oil explorers. The companies say they are harmed by environmental measures by Biden (who denied this in his speech on the Russian embargo), that there is a risk that the price will fall, that oil will lose market in the medium term because of the “green transition” and that its shareholders now just want cash, after heavy investment and years of no profit. But Biden wants “war effort.”

The European Union can say this Thursday what will become of its “green” investment plan and its energy policy. It was leaked in European newspapers that it will gradually disconnect from Russians and fossil fuels — but it will. There will be no embargo, which would blow up the price of a barrel, with inflation and perhaps recession.

Vladimir Putin was to announce this Thursday sanctions against the “West”, with which he would sell lunch and not even be able to pay for dinner.

The price of your gas, your bagel and your popcorn, to put it with comic desperation, has something to do with it all.