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Oil exports gain importance in Brazilian trade
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Oil and gas are becoming increasingly important for Brazilian trade, triggering debate on ramping up exploration.
Brazil posted a trade surplus of US$27.7bn in January-April, up from US$23.5bn in the same period of 2023, with exports totaling US$109bn and imports US$81.1bn, according to the latest official figures.
The main export product was soybean, totaling US$16.1bn, down from US$18.4bn in the first four months of last year and accounting for 14.8% of exports, compared with 17.9% a year ago. Meanwhile, crude oil represented 14.5%, up from 11.9%, reaching US$15.8bn compared with US$12.2bn in January-April 2023.
The volume of crude exports increased 33.4% year-on-year, but prices fell 3%.
"In the coming weeks, crude oil will overtake soybeans as the product most exported by Brazil; this is an unprecedented level. It will likely intensify the debate between wings of the government that advocate for accelerating the production and exploration of oil and sectors that defend more rigid environmental regulations," José Augusto de Castro, president of foreign trade association AEB, told BNamericas.
“I believe that inside the government, the argument more favorable to stricter environmental practices will prevail, but I confess that it's not an easy answer, since the economic appeal of oil is quite strong as it is generating a lot of resources for the government,” added Castro.
The rise of crude exports is coming amid record levels of oil and gas production.
President Luiz Inácio Lula da Silva recently appointed Magda Chambriard, a former head of sector regulator ANP, to replace Jean Paul Prates at the helm of federal oil giant Petrobras. Chambriard defends exploration in Brazil’s geologically promising but environmentally sensitive Equatorial Margin.
Environmental groups have historically opposed not just oil and gas, but also soybean and iron ore production.
Iron ore is the country’s third most important export item, reaching US$10.4bn in January-April, up from US$8.3bn in the same four months of last year and representing 9.6% of total exports, compared with 8.1% a year ago.
LOWER TRADE SURPLUS
Last year’s trade surplus hit a record US$98.8bn. But "this year the trade surplus will likely be between US$80bn and US$85bn because soybean exports will lose strength in the coming months, not repeating last year's record, and because imports will gain strength, mainly with an increase in products from China," said Castro.
To contain rapidly rising steel imports from China, Brazil recently imposed a special tariff. But more aggressive measures are risky, considering that China is the top destination for Brazilian exports. China imported products worth US$33bn from Brazil in the first four months of the year, followed by the US with US$12.7bn.
Regarding trade blocs, Brazilian exports to the EU totaled US$14.3bn and to Mercosur – formed by Argentina, Brazil, Paraguay and Uruguay – US$5.9bn.
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