Brazil felt immediate impacts with Petrobras shares rising close to 4% reflecting higher oil prices, while the B3 stock exchange showed volatility amid broader market concerns. The Brazilian real depreciated by around 1%, trading near R$5.20 per dollar, influenced by risk-off capital flows to safe-haven assets. Inflationary pressures linked to higher fuel and energy prices may force the Central Bank to adopt a more cautious approach to monetary easing, potentially reducing the magnitude of planned interest rate cuts. The Selic rate currently stands at 15% annually, and analysts now foresee a possible 0.25 percentage point reduction instead of the prior 0.5.
Additionally, Brazil’s reliance on imported liquefied natural gas (LNG), primarily from the US, to supplement hydropower during dry spells makes it vulnerable to global LNG cost increases driven by rising demand and constrained supplies. Inflationary pressures from energy cost increases risk amplifying consumer price indices and restraining economic activity, contributing to a forecasted slowdown in Brazil’s GDP growth to around 1.8% in 2026, down from 2.3% in 2025. The ongoing geopolitical instability in the Middle East remains a critical factor for commodity markets and economic policy considerations in Brazil throughout the year.
This article was curated and published as part of our South American energy market coverage.
