Oil Above $100: What Changes for Petrobras and the Ibovespa

The price of Brent crude oil has surpassed $105 in this session, driven by escalating tensions in the Middle East. This movement led Petrobras (PETR4) to lead the gains in the Ibovespa on a day marked by strong risk aversion in global markets. While international markets retreated, the Brazilian index rose by more than 0.6%, almost entirely supported by the weight of the state-owned company and other oil companies in the index's composition.

The immediate trigger was the movement of the Houthis, an extremist group supported by Iran, towards the Bab al-Mandeb Strait, one of the world's most important maritime routes for oil transportation. The threat of disruption in the flow through the Red Sea caused the November Brent to spike by more than 4% on the Intercontinental Exchange in London.

But oil is only half the story. A fuel package announced by the federal government is reshaping Petrobras's financial equation in ways that few investors anticipated.

How the Fuel Package Benefits Petrobras

The government announced a set of fiscal measures that includes a reduction of R$0.63 per liter in the PIS/Cofins tax on gasoline, R$0.19 per liter on ethanol, and R$1.00 per liter on diesel. At the same time, Petrobras stopped applying the R$0.44 per liter discount on gasoline A, following the end of the fuel subsidy Provisional Measure.

In practice, consumers feel part of the relief through lower taxes, while Petrobras recovers its margin. According to analysts at BTG Pactual, the measures protect the pricing policy and governance framework of the state-owned company, generating approximately $3.4 billion in additional revenues if maintained until the end of the year.

Bradesco BBI's estimates are even more optimistic. According to analysts Vicente Falanga and Ricardo França, the combination of a net gain of R$0.19 per liter on gasoline with the new benefit of R$1.00 per liter on diesel could represent, if annualized, an increase of $6.5 billion to the free cash flow for shareholders. This equates to an incremental yield of nearly 5%, placing Petrobras among the largest dividend payers in the global energy market.

What the Numbers Say About Price Lag

One of the biggest concerns in the market in recent months was that Petrobras had abandoned its international parity policy to hold prices for political reasons. The fuel package addresses part of this fear.

After the changes and considering the tax subsidies, the discount on prices practiced by Petrobras compared to export parity has decreased to approximately 21% on gasoline and 10% on diesel. Before the package, the lag was significantly higher, which pressured the company's margins and fueled the narrative of government interference.

This adjustment is relevant for two reasons. First, it reduces the risk of the company burning cash by subsidizing fuel. Second, it signals that the government has chosen to use tax policy, rather than Petrobras's pricing, as a price control instrument. It is a subtle difference, but one that the market prices differently, as shown by the recent historical volatility of the state-owned company's shares.

Is Oil Above $100 Sustainable?

The central question for those investing in oil companies is whether the level above $100 is here to stay or if it is a temporary peak linked to geopolitical news. It is worth remembering that Brent traded between $70 and $85 for much of the last few months, and spikes related to tensions in the Middle East have historically tended to dissipate within weeks.

This time, however, there are structural components that support high prices. OPEC+ continues to maintain significant production cuts. Asian demand, especially from China and India, remains resilient. And the logistical risk in the Red Sea is different from isolated crises: the presence of the Houthis in the region is a problem that cannot be resolved with a round of diplomacy.

If Brent stabilizes in the range of $95 to $105, Petrobras enters a rare operational comfort zone. The combination of a depreciated exchange rate, high barrel prices, and internal tax relief creates a cash generation window not seen since the first half of 2022.

Other Oil Companies on B3 Also Ride the Wave

The movement is not limited to Petrobras. Brava Energia (BRAV3) led the positive end of the Ibovespa with a rise of 2.55%. PetroReconcavo (RECV3) was up 1.66%, while Prio (PRIO3) advanced 1.41%. The oil and gas sector now accounts for an increasingly relevant share of the index, especially in risk-averse sessions where banks and retailers suffer.

This phenomenon of "island of value" within the Ibovespa deserves attention. While the global interest rate scenario pressures growth assets, companies with dollarized revenue and robust cash generation become a natural refuge for institutional allocators.

What This Means for Investors

The current scenario places Petrobras in an unusual position: simultaneously benefiting from external factors (high oil and strong dollar) and internal factors (favorable tax package). The big unknown remains political. If the government decides to reverse the measures or pressure the state-owned company to absorb losses again, the picture can change quickly.

For the Ibovespa as a whole, the growing dependence on Petrobras and Vale to sustain levels above 186,000 points is a sign of structural fragility of the index, not strength. The day's rise hides the fact that most sectors operated in the negative, pressured by increasing bets on interest rate hikes by the Federal Reserve, which are now approaching a 70% probability.

Oil above $100 is, at the same time, a driver and a thermometer. A driver for Brazilian oil companies. A thermometer for the level of geopolitical stress that the global market faces.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.