Russian oil was only 0.6% of Brazil’s imports in 2021

RIO DE JANEIRO, BRAZIL – Brazil imported about 365,000 barrels of crude oil from Russia in 2021. The amount is equivalent to only 0.6% of the total volume imported by the country, of 62.9 million barrels. Even if Brazil were to repeat the US decision to ban Russian oil, the impact on the domestic market would be minimal.

Before, the last acquisition had been in 2012, of a measly 884,000 barrels – out of a total of 114 million in imports that year, according to data from the ANP (National Agency of Petroleum, Natural Gas, and Biofuels) and Secex (Secretariat of Foreign Trade), of the Ministry of Economy.

The USA and Europe have already informed that they are going after new suppliers. In their sights, Middle Eastern countries and even Venezuela. Brazil should feel the dispute for Saudi Arabia, its main supplier, and the United States, which should redirect its supply to Europe.

Foreign trade specialists said it is unlikely that Brazil will import the “leftover” Russian oil, rejected by the USA and Europe. Among the reasons are logistics costs, vessel insurance, and damage to the oil companies’ images.

Luciana Reis, a lawyer specializing in the oil and gas sector, says that regardless of the embargo by Brazil, there is unease among market operators in dealing with the purchase of products from a country that is the target of various economic sanctions.

“There is a scenario of insecurity for insurance companies, shippers, and buyers themselves, who, even for compliance reasons, cannot negotiate with countries that suffer sanctions,” said Luciana.

According to the specialist, in the absence of a position from the Brazilian government, the sector itself tends to self-regulate on the subject.

“If it is difficult to contract insurance for this freight, for example, it will be a natural consequence even for private companies to seek other alternatives,” said Luciana.

Larry Carvalho, a lawyer with experience in litigation involving maritime transportation, says that the specific sanction to Russian oil only covers American companies and the importation into American territory. It would allow Brazil to continue trading with Russia without being penalized.

“Now, will Brazil be able to import or not? It will also depend on how the sanction from the European Union is going to come. Suppose it wants to apply sanctions to any company that trades petroleum. In that case, Brazilian companies will have a hard time doing business with Russia because, if they do, they will be subject to penalties in the European market,” said Larry.

However, for the lawyer, the current risk for oil companies and traders to trade with Russia is very high.

“The companies themselves can claim force majeure. There is the risk of shipping itself. For example, much of the oil is transported by Russian-flagged vessels. And the UK has already banned berthing of any vessel owned, controlled, or chartered by a Russian group, entity, or person,” Larry said.

The announcement by an official of the Arab Emirates that the country or even OPEC may increase its production to compensate for the boycott on Russian oil caused the price of a barrel of oil to plummet on Wednesday, March 9, closing at US$111.14.

With information from Poder360

More: Brazil news in English, every day from The Rio Times.