Higher commodity demand and oil-linked fiscal gains could help, but a prolonged conflict may push up global prices and cloud the pace of Selic cut
03/03/2026
Rising inflation is the main risk the war between the United States and Iran could pose to Brazil’s economy.
Economists interviewed by Valor said there could be upsides, such as stronger demand for commodities and, if oil prices rise, a boost to public finances from oil-related revenue. But they warned that an extended conflict could lift global inflation, spill into Brazil’s domestic backdrop and make the pace of cuts to the Selic base rate more uncertain.
Silvio Campos Neto, a partner and senior economist at Tendências Consultoria, said that if Brent crude holds at $80 a barrel through the end of the year, the impact on Brazil’s broad consumer price index, the IPCA, could reach as much as 0.3 percentage point in 2026. On Monday (2), Brent jumped 6.68% in London to $77.74 a barrel.
“The main transmission channel from the war to the economy is oil prices. Everything will depend on how long the rise we’re seeing now lasts and whether it climbs further. If prices stay at $80 through the end of the year, there’s an inflationary effect, and we estimate an impact of 0.2 to 0.3 percentage point,” Campos Neto said.
Tendências currently forecasts Brazil’s 2026 inflation at 4.1%. “In some way, we can incorporate part of it. Either way, there is still a lot of uncertainty around the conflict, and caution is needed in any analysis,” he said.
In his view, what is already clear is a more risk-averse environment, with greater demand for safe-haven assets such as the dollar and gold, pushing prices higher. In that context, “the most beneficial period for Brazil is put on hold.”
“Ultimately, it breaks—at least to some extent—that positive dynamic for emerging-market assets we’ve seen since the start of the year. Brazil benefited a lot from global capital diversifying into assets, especially in emerging countries. Our stock market really rode that wave, and the exchange rate also reached lower levels,” he said.
Oil shock
J.P. Morgan said that while Brazil is far from the conflict’s epicenter, a sharp rise in oil prices could significantly affect the country’s economic outlook.
In a report, economists Vinicius Moreira, Cassiana Fernandez and Mirella Sampaio estimated that each 10% increase in oil prices raises Brazil’s gross domestic product by 0.1 percentage point, lifts inflation (IPCA) by 0.2 percentage point and narrows the fiscal and current-account deficits by 0.2% of GDP and 0.1% of GDP, respectively.
“The growing importance of the energy sector over the past decade means the country now exports about 1.3% of GDP in crude oil and refined products, and public accounts tend to benefit through higher taxes and dividends from state-controlled companies,” the economists wrote.
They added that if the full rise in international oil prices were passed through domestically, gasoline prices at the pump would increase by roughly one-third of the global gain, given the heavy tax burden and other costs embedded in retail prices.
“The squeeze on real income would weigh on consumption, although overall we still estimate a slightly positive effect on GDP.”
Since the last alignment between domestic and international fuel prices in January, global oil prices have risen about 20%, J.P. Morgan said. “In a more severe scenario, our commodities research estimates oil could move above $100 a barrel,” the economists wrote.
Hormuz a key worry
Economists at the Getulio Vargas Foundation also see the rise in global inflation as one of the biggest threats to Brazil.
Aloisio Campelo Junior, a researcher at the Brazilian Institute of Economics at the Getulio Vargas Foundation (FGV/Ibre), said the war’s effects on Brazil could become relevant if the conflict drags on—and could be both positive and negative.
On the positive side, he said, revenue from Brazilian oil could be lifted by stronger demand for the country’s crude. Global supply could be disrupted if Iran manages to keep the Strait of Hormuz closed, blocking shipments from the Persian Gulf. Roughly one-fifth of the world’s oil consumption passes through the strait.
But Campelo Junior said a prolonged closure has the potential to push up inflation worldwide. “If it lasts too long, it will have some impact, mainly, first and most intensely, on segments more tied to foreign trade, like industry.”
*By Lucianne Carneiro, Alessandra Saraiva, Paula Martini, Rafael Rosas and Anaïs Fernandes — Rio de Janeiro and São Paulo
Source: Valor International
https://valorinternational.globo.com/