Brazil faces triple shock: tariffs, El Niño, and Hormuz closure simultaneously test economy.

The closure of the Strait of Hormuz for the second time in weeks could not have come at a more delicate moment for Brazil: the country simultaneously faces an American tariff threat with a deadline set for this Wednesday, the confirmed arrival of El Niño, and a National Treasury struggling to roll over its public debt. The confluence of these vectors turns July 13, 2026 into an inflection point that will simultaneously test the external, fiscal, and inflationary resilience of the Brazilian economy.

Brent crude jumped nearly 5% on Monday, approaching US$80 a barrel, after Iran announced a new closure of the Strait of Hormuz in response to American strikes in the Persian Gulf over the weekend. Iran's Revolutionary Guard reported having attacked U.S. military installations in Bahrain, Kuwait, and Jordan, while American forces responded with strikes against Iranian air defense systems and missile capabilities. The move effectively unwinds the provisional agreement signed last month aimed at normalizing traffic through the strait — through which 20% of global oil and gas production passes. For Brazil, whose agribusiness is heavily dependent on fertilizers transiting this route and whose Treasury already faces structural inflationary pressure, the shock is doubly pernicious.

Local markets opened the week reflecting this global risk aversion. The dollar rose to R$5.118 on Monday morning, reversing part of Friday's 0.29% decline, when the real had strengthened after June's IPCA surprised to the upside. Ibovespa futures were down about 0.40%, erasing part of the 2.96% rally that pushed the index to 177,866 points in the previous session. Interest rate futures tracked oil higher, with the January 2028 DI rate climbing from 13.855% to 13.91%, a premium rebuild that contrasts with Friday's relief and illustrates the fragility of the current market equilibrium.

The domestic context offers no respite either. The Focus bulletin released Monday brought the second consecutive downward revision to the 2026 IPCA projection, which retreated from 5.30% to 5.16% — a direct response to June's surprising result, when official inflation printed at just 0.16%, versus 0.58% in May and below the market's median forecast of 0.31%. The pullback was driven by deflation in food and beverages and by the impact of government subsidies on gasoline and diesel. The diffusion index — the percentage of items showing price increases — fell from 65% to 53.6%, and core measures retreated from 5.29% to 4.91%, with underlying services decelerating from 5.57% to 4.8%. Valor Econômico columnists assessed that the result opens room for at least one more 0.25 percentage point cut to the Selic in August, provided no surprises materialize — and oil, precisely, is that surprise in the making.

The tension is explicit: while economists trim their 2026 inflation projections, the government's own economic team is preparing to raise its official IPCA forecast, according to Folha de S.Paulo. The justification is El Niño, whose arrival has been confirmed and whose effects on agribusiness are beginning to be calibrated with greater precision. The climate phenomenon threatens to delay grain planting in the second half, reduce harvests, and hamper livestock — impacts that will translate into pressure on food prices precisely as the external oil shock already compresses the cost chain. The combination places the Central Bank in an uncomfortable position: June's data legitimize continuing the easing cycle, but the horizon ahead deteriorates due to factors that domestic monetary policy cannot control.

On the external front, the clock is ticking. The Brazilian government awaits with resignation the outcome of the American Section 301 investigation, whose deadline expires this Wednesday, July 15. According to Valor Econômico, the Palácio do Planalto believes Washington will impose a 25% surcharge on Brazilian products, influenced by the politicization of the issue in light of the Brazilian electoral calendar — and that it will only revisit its position after learning the outcome of the 2026 elections. Brazil's strategy is to await the actual implementation of the measure before calibrating retaliations permitted under the Reciprocity Law. Amcham Brasil, CNI, and the U.S. Chamber of Commerce sent a joint letter to both governments requesting a short-term agreement, but the dominant reading in Brasília is that the gesture will not be enough to reverse the decision.

This external pressure scenario paradoxically reinforces Brazil's strategic interest in critical minerals. President Lula has been treating the sector as the "new pre-salt," and in a recent meeting at the Palácio do Planalto discussed mobilizing BNDESPar and Petrobras to acquire stakes in mining companies, alongside creating credit lines for prospecting. The initiative connects directly to the global geopolitical dispute over energy transition inputs and positions Brazil as a potential alternative supplier for countries seeking to escape dependence on China — precisely the move that Grupo Rima, dominant in the global magnesium market, has been exploring for years under the leadership of Ricardo Vicintin, who is preparing his succession to his son Bruno over the next eighteen months.

On the fiscal front, two data points published in recent days reveal the magnitude of the structural challenge. A study prepared by Federal Revenue auditors indicates that Social Security loses 56% of its potential revenue through tax benefits, evasion, delinquency, and litigation — a gap that makes it even more difficult to balance the system without deep reforms. Simultaneously, the National Treasury faces growing market resistance to auctions of NTN-B bonds, indexed to the IPCA plus a fixed rate. Given the premiums being demanded, the Treasury has preferred to draw down its liquidity cushion or swap the papers for LFTs, indexed to the Selic — a strategy that eases the short term but deepens the debt's vulnerability to fluctuations in the benchmark rate.

In the banking sector, BRB completes a year without publishing public financial results, keeping opaque the extent of the damage inherited from the Banco Master scandal. The episode resonates in an already tense environment after Febraban classified as "extremely grave" the police revelation that Daniel Vorcaro, owner of Master, had allegedly commissioned dossiers against Itaú Unibanco's CEO, Milton Maluhy Filho. The CNJ, in turn, suspended the bankruptcy proceedings of Banco Santos — closed in 2005 — removing the judicial administrator and block