Brazil posted a record trade surplus of $14.2 billion in the first quarter of 2026, marking a 47.6% increase compared to the same period in 2025 thanks in large part to high oil prices. Brazil’s crude oil exports climbed 31% Y/Y to $12.56 billion in the first quarter, with China accounting for 57% of oil exports at $7.2 billion, and 65% of crude exports in March alone. In contrast, oil exports to the U.S. collapsed by 40% to just $632 million while overall exports fell 18.7% due to new tariff pressures and shifting corporate strategies.
Interestingly, Brazil’s defense exports more than doubled to $931 million during the quarter, with Germany, Bulgaria, the United Arab Emirates, the United States and Portugal major buyers of Brazilian defense products. Overall, Brazil’s total exports increased 7.1% Y/Y in the first quarter to $82.3 billion while imports increased marginally by 1.3% to $76.9 billion.
Brazil’s Ministry of Development, Industry, Trade, and Services has revised its 2026 trade projections, forecasting a $72.1 billion surplus for full-year FY 2026, reflecting an expected 5.9% increase in the trade balance compared to the previous result.
Unfortunately, the Iran conflict is negatively impacting other aspects of Brazil’s economy. The war has severely disrupted Brazil’s fertilizer imports by restricting shipping through the Strait of Hormuz, threatening supply and driving prices up. While a net oil exporter, Brazil is the world’s largest importer of fertilizers, relying on imports to meet roughly 85% of its fertilizer needs. Over 30% of Brazil’s urea imports come from the Persian Gulf, while 50% of fertilizer imports pass through the conflict-ridden Strait of Hormuz.
Brazil’s lack of domestic production capabilities for key fertilizers leaves it highly exposed to these regional disruptions in the Persian Gulf, with fertilizer and diesel costs rising faster than grain prices, threatening to fuel inflation. The severing of Middle Eastern trade lanes has caused urea prices to jump 35%, threatening the current agribusiness season.
Meanwhile, whereas high oil prices boost government revenue, high oil prices are expected to trigger domestic inflation. To counter this, Brazil’s Central Bank has slowed its rate-cut cycle, opting for a 25-basis point reduction to 14.75%.
By Alex Kimani for Oilprice.com
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