We’re covering the effects of the oil crash on the Brazilian economy. A plan to reduce the financial impact of bailing out states. And the Workers’ Party begins asking for Jair Bolsonaro’s head.
How crashing oil prices affect Petrobras (and Brazil)
Monday and Tuesday were two of the worst days in the history of oil trade, as investors come to terms with the fact that supply will overwhelm demand for months and maybe years to come. On Monday, West Texas Intermediate prices for May had their worst rout on record (USD -37.63). On Tuesday, Brent futures crashed 24 percent, settling at USD 19.33 a barrel.
- Every single oil company in the world will be affected by the crisis, directly or not. Petrobras, Brazil’s state-controlled oil and gas company, has estimated a break-even price of USD 16 per barrel for 2020 in its cost of production. But as Brent prices approach that level, the company is beginning to cut investments and focus only on subsistence.
Why it matters. The oil sector accounts for 13 percent of the Brazilian GDP. And the budgets of several states — especially Rio de Janeiro — are highly dependent on oil royalties.
- While public administrations...