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Middle East Conflict and Possible Closure of the Strait of Hormuz Raise Alarm for Energy Security and Production Costs in the Country, Says Specialist from the Federation of Industries of Rio de Janeiro.
The escalation of tensions in the Middle East, marked by the recent U.S. attack on Iranian nuclear facilities, raises significant concerns about the increase in international oil prices. According to Firjan, the scenario highlights the critical need for Brazil to expand its reserves and modernize its refining capacity to mitigate economic impacts.
Impact of the Conflict in the Middle East on Oil Prices
Karine Fragoso, General Manager of Oil, Gas, Energy, and Naval at Firjan, warned this Sunday (22) that a possible increase in oil prices in the global market should elevate production costs. This increase could spread across various industries, directly impacting the prices of derivatives and other production chains.
The energy market is already facing a phase of elevated prices globally, driven by the pursuit of cleaner energy matrices. A reduction in supply, with demand remaining, would inevitably lead to higher costs.
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A Critical Point for the Global Production Chain
Concerns intensify with the possibility of Iran closing the Strait of Hormuz, a crucial route for global oil supply. “We are worried about the price of oil and also about the impacts that the closure of the Strait of Hormuz could have on other production chains,” commented Fragoso. She emphasized that as an importer of equipment, Brazil may be directly affected by the price surge resulting from a potential reduction in energy supply.
The Urgency of Replenishing Brazil’s Oil Reserves
The current global context underscores the strategic importance of replenishing Brazil’s oil reserves. “This sheds light on how important it is to restore our reserves,” the executive stated. Currently, Brazil has less than 13 years of proved reserves, a significantly lower number than the 23 years recorded a decade ago.
According to Fragoso, this situation “adds unnecessary risks and puts us at a disadvantage compared to other economies.” To reverse this situation, she advocates exploring new frontiers, such as the five basins of the Equatorial Margin and the Pelotas Basin.
Challenges of Refining and the Need for Modernization of the National Oil Industry
In addition to increasing reserves, it is crucial to expand refining capacity for oil produced in Brazil. Fragoso highlighted the need to adapt the refining industrial park, which dates back to the 1980s. It is also essential to progress in a regulation that serves as an incentive for increasing production in mature fields, such as those located in the Campos Basin, ensuring greater autonomy and security for the country’s oil sector.
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