More Expensive Pipelines? With Brent Oil Up 50.21%, Sewage and Plumbing Works Inflate Prices and Harm the Construction Sector

Brent Crude Has Accumulated Gain Of At Least 50.21% In One Year, And The Construction Industry Is Also Among The Affected 

The Brent crude oil has an accumulated gain of at least 50.21% over the last 52 weeks. One of the reasons for this increase is the crisis between Russia and Ukraine, which erupted at the end of February because the Ukrainian president, according to Putin, was not complying with the rule laid out in the agreement between the two countries regarding the non-participation of military groups, such as NATO. The construction industry, specifically in the area of piping, is affected by the rising inflation.

In light of this, the construction industry will become more expensive due to the prices of pipes, which are expected to rise in 2022. This could, according to specialists from Martec – a company located in São Paulo that works with services related to unblocking – lead to higher prices in construction.

Higher Brent Crude Impacts Several Sectors And Construction Industry Is One Of The Most Inflated Areas In 2021

According to data from IBGE, the construction industry was one of the sectors that saw the most significant increases and suffered from inflation in 2021, ending with a rise of 10.6%. The cost per square meter is over R$ 1,600 and reaches about R$ 2,500 in some cities, such as Balneário Camboriú, in Santa Catarina, which is among the three most expensive municipalities in the country. The Getulio Vargas Foundation (FGV) states that the sector’s increase in April was 0.81%.

The services of leak detection and unblocking services are likely to become more expensive due to the variations in the construction industry, and construction material companies are already passing on the prices to consumers. 

The Brent crude and its values in commodities deeply impact the prices of various other sectors, such as in the markets, due to higher freight costs. Truck drivers complain about the variations in diesel, which make fuel more expensive than gasoline. Chorão, a leader in the field, has already spoken about the possibility of a strike. Transport companies and business owners in the logistics sector are also addressing the potential for price variations because the current rates are outdated for the market. The last increase implemented by Petrobras occurred on the 17th of this month.

The instability in commodities has caused coal prices to rise again, leading to an accumulated price increase of 103% in just one year, resulting in crises not only in the construction industry but also in the energy sector, where flags are likely to increase, according to Aneel, by 65% this year.

Piping And Construction Industry Are Focus In Debates With Increase In Brent

The majority of piping is made of plastic based on brent crude. As the market has the ability to track prices from abroad just like Petrobras does, the costs are passed on to consumers.

There are some ways to increase the stocks of oil barrels while controlling demands, and this will lead to a decrease in market prices. One of the methods utilized for this is the United States, according to Biden, to negotiate Brent with Venezuela again, as well as the European Union.

In this way, Venezuelans could pay their external debts through oil and gas in the ‘offshore’ sector, meaning, outside the coast. The decision to resume purchasing products from Venezuela was reconsidered after the United States blocked Russians from the global market due to the invasions in Ukraine.