Peace breaks petróleo, leaving Brazil's oil shield in freefall

Brazil's financial markets opened August under the sign of a geopolitical de-escalation that, paradoxically, penalizes one of the country's main revenue engines. Donald Trump's signal that he had canceled a planned strike against Iran to resume nuclear negotiations pushed Brent crude down roughly 5%, dragging contracts below US$83 per barrel — a development that eases global inflationary pressure but strips the real of the currency support that elevated commodity prices had been providing. Amid this ambivalent backdrop, the dollar traded near flat at the start of Monday's session (3), quoted at R$5.067, while the DXY index slipped 0.19%, reflecting stronger risk appetite abroad that is not translating cleanly into Brazilian FX.

The oil pullback, which closed July with the largest monthly gain since March — precisely the month the war in Iran erupted — marks an abrupt trend reversal that markets are still digesting. For Petrobras, whose ordinary shares and ADRs traded on the NYSE were already feeling pressure from an internal regulatory dispute, the timing is especially uncomfortable. Antaq was set to discuss on Monday the outcome of a pre-salt logistics support tender that could force the state-controlled company to absorb up to R$700 million in additional costs under a contested contract. At the same time, the company is locked in an escalating standoff with the Ministry of Mines and Energy over the regulation of the 2021 Gas Law: the government wants to finally open up the natural gas transportation infrastructure market, while Petrobras is resisting the loss of exclusivity over that system. Overseas, however, the company announced a new deepwater natural gas discovery in Colombia at the Sandia-1 well, where it operates with a 44.4% stake in the consortium alongside Ecopetrol — signaling that its strategy of replenishing reserves in new frontiers is advancing independently of domestic tensions.

It is against this backdrop of mixed signals that this week's Focus report delivered a genuine surprise: economists cut their Selic projection for year-end 2026 from 14% to 13.75% — the first downward revision in rate expectations since March, when the war in Iran drove up bets on monetary tightening. The simultaneous revision of the IPCA projection, from 5.12% to 5.03%, suggests the market is beginning to price in a scenario of geopolitical cooling and its disinflationary effects. Rate futures responded: the DI rate for January 2027 pulled back to 13.77%, and the January 2031 contract eased from 14.38% to 14.255%. Bahia Asset, however, cautions that the easing cycle will only consolidate in 2027, with the Selic remaining elevated for an extended period.

This "higher-for-longer" rate environment is exacting its toll on multiple fronts simultaneously. FGV recorded a 1.4-point drop in the Business Confidence Index in July, to 91.3 points, giving back the entire gain of the previous two months. Researcher Aloisio Campelo Jr. identified two distinct vectors of deterioration: in industry, concern over US import tariffs; in services, a perceived weakening of demand. The reading is consistent with the fiscal picture taking shape with growing clarity at the end of Lula's third term — and which is dominating the economic debate at the start of August with full force.

Gross general government debt reached R$10.809 trillion in June, equivalent to 81.9% of GDP, the highest level since April 2021, according to the Central Bank. The consolidated public sector recorded a primary deficit of R$55.3 billion in the month, up 17.4% over 12 months. The nominal deficit accumulated over 12 months hit R$1.318 trillion, or 9.99% of GDP — the highest level since 2021 — with the interest bill alone consuming R$110.7 billion in June. The deteriorating dynamic, amplified by congressional earmarks, pension spending, and subsidized credit, is leading analysts and financial markets themselves to conclude that the next elected president will need to negotiate adjustment measures still in 2026 for implementation in the early months of 2027. The Lula government, in response, published a provisional measure this weekend to expand credit and stimulate debt renegotiation, with contributions of up to R$2.75 billion to guarantor funds — a move that critics argue aggravates precisely the problem it seeks to mitigate.

Trump's tariffs remain a disruptive vector for Brazilian exporters, with impact reaching up to 42% of total exports in states such as Ceará, Espírito Santo, and Santa Catarina, according to a Folha de S.Paulo survey based on MDIC data. The effect on bilateral trade with Argentina is equally revealing: Brazilian exports to its neighbor fell 19.4% in the first half of 2026, reversing the growth trajectory seen in the same period a year earlier. In the luxury fashion sector, Adriana Degreas — a brand with 45% of its exports destined for the US market — is studying whether to relocate part of its production to Colombia as an escape route from Washington's surcharge of up to 37.5%.

Tax reform, meanwhile, entered its operational phase on Monday: companies are now required to issue invoices with the information corresponding to the new system, after seven months of postponements. Implementation, though gradual, is already generating unwanted side effects — from cash flow distortions in loyalty programs to a succession planning market fueled by misinformation about supposed increases in the ITCMD.

The immediate agenda centers on three major inflection points: the Copom's decision on the Selic, broadly expected at 14%, but with close attention to the language of the statement regarding the future pace of cuts; quarterly earnings from Bradesco, which surprised the market with a capital increase of up to R$10 billion — an announcement that pushed shares down 2.5% and generated divergent readings among analysts; and the evolution of negotiations between the United States and Iran, whose outcome will determine whether today's oil pullback represents a one-off correction or a structural reversal with direct consequences for Brazil's terms of trade.

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**Bradesco (B3: BBDC4)** — The bank announced a capital increase of up to R$10 billion via private subscription, with controlling shareholders committed to contributing at least R$8 billion; the operation, disclosed days before second-quarter earnings, surprised analysts who had been expecting a BradSaúde follow-on and drove a 2.5% drop in shares at the market open.

**Raízen (B3: RAIZ4)**