What would Brazil's entry into OPEC+ mean?

Brazil has been invited to join the OPEC+ group and mines and energy minister Alexandre Silveira is looking into the matter.

Analysts interviewed by BNamericas suggest that joining the cartel, which includes a total of 13 OPEC member nations plus 10 other oil-producing countries, would mainly bring geopolitical gains for Brazil, which is establishing itself as a major player in energy geopolitics. 

Created in 1960 with the aim of establishing a common policy on oil production and sales, OPEC members are Saudi Arabia, Iran, Kuwait, Venezuela, Iraq, Algeria, Ecuador, Gabon, Indonesia, Libya, Nigeria, Qatar and the United Arab Emirates.

OPEC+, formed in 2016, meets regularly to decide how much crude oil will be sold on the world market.

With production of around 3.6Mb/d, Brazil is the ninth largest oil producer in the world and the biggest in Latin America. In 2022, according to the ANP, the country exported an average of 1.3Mb/d of oil, just over 1% of global demand in the period.

Federal energy research company EPE predicts that Brazilian oil production will peak at 5.4Mb/d in 2029.

Nathana Garcez, a PhD student on the San Tiago Dantas postgraduate program, focusing on the geopolitics of oil and gas, Brazil's entry into OPEC+ would give the country greater weight as a producer.

"It's a recognition of the country as a relevant player within the geopolitics and geoeconomics of energy, contributing to the construction and movement of the market," she told BNamericas.

Garcez believes that the link with OPEC could pave the way for new economic partnerships and exchanges with other countries. 

"But the question remains as to what the path will be for President Luiz Inácio Lula da Silva's policy on renewable energies. There will certainly be domestic disputes over whether the energy transition project will be a priority," she said.

Marcelo de Assis, upstream director at Wood Mackenzie, believes that Brazil would enter OPEC+ as an associate and not a member, and would therefore not be subject to output limits. 

"In Brazil's current situation, with production growing until 2029, it wouldn't make sense to participate in quotas and production cuts," he told BNamericas. 

Assis pointed out that although Brazil is a major producer, it is also a major consumer, and that the national public budget is not largely sustained by the price of oil like most OPEC members.

"Therefore, sharp increases in the price of oil have a significant impact on the price of oil products in the Brazilian domestic market [which is dependent on imports of diesel and gasoline, for example]," he explained. 

"The gains are mostly political at the current juncture, taking into account the rise of the BRICs with Saudi Arabia and a diplomatic vision of the Global South," added Assis.

Raphael Faucz, Senior Oil Markets Analyst at Rystad Energy, says it would be negative if Brazil were subjected to production quotas, given that the country is one of the main drivers of rising world oil production. 

"We can see this geopolitical movement as an important step towards the alignment of the countries of the so-called Global South, organizing themselves as an alternative to the traditional forums of discussion, traditionally led by the United States, the European Union, the United Kingdom, etc.," he told BNamericas.

In the opinion of Mahatma Santos, director of the national institute for strategic oil studies (Ineep), Brazil is positioning itself as an important player, actively participating in various institutional decision-making spaces on global energy security and transition, as well as on the future of oil and gas production in the world. 

"Any accession to OPEC+ would not necessarily mean that Brazil would have to subject itself to a policy of cutting or expanding its production more rapidly. It would be more a reflection of the country's repositioning in energy geopolitics," he told BNamericas.