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Is there a risk of shortages in Brazil?
The lag in prices practiced by Petrobras in relation to the prices of a barrel of oil abroad is starting to cause problems in the Brazilian market.
Distributors and gas stations are struggling to buy products because of the suspension of imports by private companies.
Understand: importing is unfeasible because it is not worth bringing more expensive fuels here than those sold by Petrobras in Brazil.
- The last readjustment of the state-owned company was more than 50 days ago, and the sector calculates that the lag was 40% on diesel and 30% in gasoline ahead of the oil crash on Wednesday.
why it matters: Brazil is not self-sufficient in the supply of fuel to the domestic market. Dependence on imports reaches 25% for diesel, while for gasoline it is around 10%.
Result: there are reports of problems in Paraná and in states in the North and Northeast, which are more dependent on products that come from abroad. Ipiranga has communicated to resellers that requests for additional volumes will be submitted for analysis before approval.
In Bahia, a state supplied by a privatized refinery, gasoline prices already reach almost BRL 8.
How to solve? While it does not find a solution on how to compensate in the domestic market for the soaring oil prices, the government is putting its chips in the projects being processed in the Senate that promote a cut in taxes.
To end the lag in domestic prices and not change Petrobras’ pricing policy, a wing of the government defends subsidizing fuel prices, a proposal that faces resistance from the economic team. With the current lag, the cost would be BRL 27 billion for three months.
More on soaring oil:
Cryptos forge ahead with Biden’s ‘soft’ regulation
The cryptocurrency market reacted positively to the executive order signed this Wednesday (9) by US President Joe Biden that sets out parameters for cryptocurrency regulation.
Bitcoin, the biggest and best-known crypto, was advancing 8%a US$42 thousand (R$ 210 thousand), at the end of the night.
Understand: the document signed by Biden establishes a national policy for digital assets taking into account consumer and investor risks, financial stability, illicit financing, etc.
The sector reacted well because it feared measures that could tighten the siege against the crypto market, which did not happen. It also welcomed the inclusion of topics such as financial inclusion and innovation among the government’s priorities for digital assets.
in numbers: according to US government data, the digital asset market is valued at more than $3 trillion (R$ 15.3 trillion), and around 16% of adult Americans have invested and traded cryptocurrencies.
This popularity of crypto in the US is pointed to by experts polled by the Wall Street Journal as a reason for lenient regulation by the Biden administration, which is struggling to retain a Democratic majority in Congress in the midterm elections later this year.
Is here? The Central Bank and Congress recently advanced the discussion to regulate financial operations with cryptocurrencies in Brazil.
The Senate approved a proposal that includes fraud with these digital currencies within the scope of the penal code and requires virtual asset brokers (exchanges) to operate in the country with authorization from a federal government agency.
Digital currency: Biden’s order also provides for studies to create an official digital currency for the United States. In Brazil, the BC is also evaluating the implementation of Real Digital.
Oil and other commodities decline
After a start to the week with markets very apprehensive about the economic effects of the war in Ukraine, including the sanction on Russian oil, Wednesday (9) saw a rise in stock markets, a fall in the dollar and a drop in commodity prices.
What explains: the day was marked by expectations of a lessening of the tone of the conflict in Eastern Europe. Moscow said it wanted to resolve the war through negotiations and said overthrowing the Ukrainian government was not in its plans. Ukraine has also shown willingness for a diplomatic outcome.
A natural profit-taking in the face of the recent sharp rise in the prices of basic materials also had an influence on prices.
In numbers:
- The dollar lost value against 17 emerging currencies, a sign of falling risk aversion. In Brazil, the American currency came to be below R$ 5 at the low of the day, and closed in BRL 5.01with a drop of 0.77%.
- Brent barrels slowed from their highest price level since 2008 and fell 12%, to US$ 112 (R$ 562). It was the biggest daily drop in nearly two years. Signaling an increase in market supply with the use of emergency reserves also contributed.
​ - Wheat, one of the items that increased in value since the beginning of the conflict, fell 7% on the Chicago Stock Exchange. Brazil is a major cereal importer.
In the purse: despite the sudden drop in oil, Petrobras shares closed at almost zero to zero. It is worth remembering that when commodity prices soared, the state-owned company’s shares fell in reaction to the government’s intention to interfere in the company’s pricing policy.
The Ibovespa followed the external good mood and closed at a high of 2.43%at 113,900 points.
negative January for the industry
Brazilian industrial production declined 2.4% in January, the lowest for the month since 2018, according to the IBGE.
The performance came in below market estimates, which had expected a drop of 1.9%.
in numbers: the Brazilian industry ended January 3.5% below the level of February 2020, before the pandemic. Of the 26 activities surveyed, 20 declined in the last month.
What explains: the sector has not yet gotten rid of the knots in the production chains that emerged with the pandemic and which made inputs more expensive.
The cycle of high interest rates, persistent inflation and the drop in the population’s income are also pointed out as obstacles to the growth of the industry, and should remain a specter this year.
Automotive industry: one of the activities most impacted by the lack of parts closed the first two months with a drop in 21.7% in automotive production compared to the previous year.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
