Brazilian oil could find new destinations in the face of Trump's tariffs

By Marta Nogueira

RIO DE JANEIRO (Reuters) -Brazil has logistical and commercial flexibility to preserve the competitiveness of its oil on the international market if the 50% tariff announced by U.S. President Donald Trump on Wednesday comes into effect on August 1, experts told Reuters.

Oil is the main product on Brazil's export list to the U.S. and until now was exempt from the 10% tariff applied this year to Brazilian exports, but it is unclear whether that will remain the case with the new 50% tariffs.

"These tariffs may generate short-term noise in trade flows and impact margins on spot contracts, but do not represent a structural risk," said BTG Pactual analysts Luiz Carvalho and Gustavo Cunha, in a report to clients.

The Brazilian Petroleum Institute (IBP), that represents state-run oil firm Petrobras and oil majors operating in Brazil, such as Shell, TotalEnergies and Equinor, said in a statement on Thursday that it views Trump's measure "with concern", and urged Brazil's government to act diplomatically.

IBP had no information on whether the previously valid tariff exemption for oil would remain so after the announcement.

In 2024, Brazil exported a total of 1.78 million barrels per day (bpd), of which 243,000 bpd were destined for the U.S., according to government data compiled by consultancy StoneX.

Petrobras, Brazil's main producer, will not be significantly impacted by the tariffs, BTG analysts said. In the first quarter of the year, only 4% of its exports went to the U.S., according to company data.

In terms of oil products, Petrobras' share of exports to the U.S. was 37% of a total of 209,000 bpd, or around 77,000 bpd.

"Although the U.S. has a considerable share of derivatives exports, when we look in absolute terms, we believe that this is a small volume and that Petrobras should be able to redirect this export flow to another country with ease," said the BTG analysts.

In a statement, Petrobras said that it is assessing the impact of the tariff announced the day before and maintains its strategy of always seeking "the best alternative for the company in any scenario".

On Thursday, Petrobras' preferred shares were trading close to flat.

(Reporting by Marta Nogueira; additional reporting and writing by Fabio TeixeiraEditing by Marguerita Choy)