By Thadeu Dos Santos, Regional Director at Infinox
“Crude oil futures moved higher today, supported by renewed geopolitical tensions in the Middle East and ongoing disruptions to key energy routes. Markets remain highly sensitive to developments around the Strait of Hormuz, where severely constrained flows continue to tighten global supply expectations.
After a sharp decline in prices yesterday amid hopes of de-escalation, conflicting signals and persistent uncertainty are keeping volatility elevated. In this environment, oil-consuming economies may continue to seek alternative supply sources, while oil exporters such as Brazil could benefit at the margin from stronger demand for non-Middle East barrels. Elevated crude prices can support Brazil’s export earnings and improve the trade backdrop, which has remained resilient on commodity flows. However, despite being a major crude exporter, Brazil remains reliant on imported refined products—particularly diesel—meaning higher global oil prices can translate into domestic fuel cost pressures and increased inflation risks. Recent policy measures, including tax-related adjustments aimed at cushioning diesel costs, underscore the sensitivity of the domestic inflation channel. Inflation expectations have also moved higher, with the latest survey pointing to around 4.17% for year-end 2026. Even so, Brazil’s central bank began easing last week with a 25 bp cut to 14.75%, highlighting a careful balance between growth considerations and inflation risks. Against this backdrop, the real may remain exposed to broader risk-off and USD strength, while persistent inflation risks and improved terms of trade could help limit downside moves.”
