Goldman Projects Brent Oil Price That Would Test Economic Expectations of Bolsonaro’s Government: Will Gasoline and Diesel Rise Again?

Analysts from Goldman Sachs  estimate that the average price that should be charged for a barrel of oil should be US$ 130 to solve the supply and demand issues.  Currently, the price of the barrel is around US$ 122. 

The lack of productivity in the oil sector due to the war between Ukraine and Russia  – one of the largest oil exporters in the world – is causing countries like Brazil and the United States to face high fuel prices and inflation in the fuel sector. In order to control prices, analysts say that a further increase in prices would be necessary, which would undermine Jair Bolsonaro’s plan to eliminate the federal taxes charged on a liter of gasoline and diesel. 

Jair Bolsonaro, the President of the Republic, reportedly announced, in a press conference last Monday, that he was interested in reducing the state taxes on fuel, which would lead to a federal transfer to governors and a price reduction that could reach over 15% in the price per liter. However, with a possible increase in oil prices, his plans could be annulled, given that Petrobras has, since 2016, under the Temer administration, the ability to adjust its prices  according to the external market. 

The European Union Sees Venezuela As a Way to Control Oil Prices, But Bolsonaro Has Not Commented on the Matter Until Now. Gasoline and Diesel Prices, According to Petrobras, Are Already Devalued in Double Digits. 

The European Union announced that, even with the sanctions imposed by Trump, former President of the United States, they may start buying oil barrels from Venezuela as a way to control commodity prices and allow the country to pay its  external debt. 

Biden, President of the United States, had also previously addressed the possibility of lifting the sanctions, as oil prices in the country could decrease and seal the market from double-digit inflation, which could put his new candidacy and reputation to the test. The President of the Republic, Jair Bolsonaro, has not commented clearly on the matter. According to him, the situation could be resolved with price controls implemented on the Brazilian state-owned company.

Despite the decrease in oil exports globally, the Russians insist that their economy has not been harmed and that  what they had planned has occurred. Despite this, it is estimated that they are buying Brent oil through alternative routes distributed between China and India. 

Gasoline Above R$ 10  and Diesel at R$ 6 Is Already a Reality

A Study released this week shows that the high price of gasoline is causing many people to give up  their cars to take the bus. This reality is increasingly common for Brazilians who cannot afford the high fuel prices, given that the price of a liter of gasoline has reportedly reached over R$ 10 and diesel, in the state of Santa Catarina, is at R$ 6. 

In a tax-free promotion conducted by Havan at the end of May, it was confirmed that the price of a liter of gasoline without the state  and federal taxes is around R$ 5.