Experts say that Brazil's oil will remain competitive on the international market even if President Donald Trump's 50% tariff is implemented on August 1.

The main Brazilian export to the U.S. is oil. This product was previously exempted from the 10% tariff that applied to Brazilian exports this year. It is not clear if the exemption will continue with the new tariffs of 50%.

In a client report, BTG Pactual analysts Luiz Cunha and Gustavo Carvalho said that these tariffs could create short-term noise and affect margins for spot contracts. However, they do not pose a structural threat.

The Brazilian Petroleum Institute, which represents the state-run Petrobras and other oil companies operating in Brazil such as Shell TotalEnergies and Equinor said in a Thursday statement that it views Trump’s measure with "concern" and encouraged Brazil’s government to take diplomatic action.

IBP did not know if the tariff exemption on oil that was previously in effect would continue to be valid after the announcement.

According to data collected by StoneX, Brazil will export 1.78 million barrels of oil per day in 2024. Of this, 243,000 barrels are destined for America.

Analysts at BTG said that the tariffs will not have a significant impact on Petrobras. According to data from the company, only 4% its exports were sent to the U.S. in the first quarter.

Petrobras exported around 77,000 barrels per day (bpd) of oil products to the U.S., which is 37% of the total 209,000 bpd.

The BTG analysts said that, "despite the U.S. having a significant share of derivatives exported, in absolute terms we believe this is a very small volume, and that Petrobras could easily redirect this export to another country."

Petrobras, in a press release, said it was assessing the impact the tariff announced a day earlier and that the company would continue to seek "the best option for the business under any circumstance".

Petrobras preferred shares traded at a near-flat rate on Thursday.

(source: Reuters)