Petrobras's (PETR3; PETR4) Strategic Shift: Brazil's Oil Giant Driving Energy Transition and Market Records

As Brazil’s stock market reaches a historic milestone, surpassing the 170,000-point mark on the Ibovespa, driven by a strong wave of foreign investment, Petrobras is standing at the center of this momentum. Operating at near-full capacity, the state-controlled oil giant has become a key pillar supporting investor confidence and market optimism.

Petrobras is not only benefiting from the current rally but actively shaping it through efficiency gains, record production levels, and a clear strategic shift toward cleaner energy.

Petrobras Refining at Near-Full Capacity Boosts Investor Confidence

The Ibovespa’s move above 170,000 points this Wednesday (21) was fueled by the strong performance of large-cap stocks, with Petrobras playing a central role. When Brazil’s main index climbs to record highs, it reflects confidence in both corporate earnings and the broader economy, and Petrobras’ operational strength is a major part of that equation.

Between 2023 and 2025, Petrobras refineries operated with an average Total Utilization Factor (TUF) of 92%, up from 88% in 2022. Over the same period, the company increased average oil product output by 3% and expanded S-10 diesel production capacity by more than 20%, adding 138 thousand barrels per day (kbpd).

These numbers clearly signal improvements in operational efficiency, asset optimization, and sustained investment in refinery modernization. The result has been a more resilient supply of high-quality fuels with a lower environmental impact.

S-10 Diesel Expansion Cuts Imports and Improves Air Quality

The expansion of S-10 diesel, Brazil’s lowest-sulfur diesel, was made possible through projects at the Reduc, Replan, Revap, and Rnest refineries. By boosting domestic output, Petrobras has reduced the country’s dependence on imports while also contributing to cleaner air, given the fuel’s lower sulfur content.

William França, Petrobras’ Executive Director of Industrial Processes, summarized the strategy clearly, and I agree with his assessment:

“The projects implemented in recent years have steadily increased the capacity and operational flexibility of our refining system. The expansions at our refinery units are the result of efficiency gains, process modernization, and applied engineering, always with a focus on safety and operational reliability.”

Efficiency gains have translated directly into new records. From 2023 to 2025, average diesel production rose 3.1%, while gasoline output jumped 9.3%, reaching historical averages of 419 thousand barrels per day of gasoline and 452 thousand barrels per day of S-10 diesel.

Petrobras Biorefining Strategy Strengthens Brazil’s Energy Transition

One of the most compelling elements of Petrobras’ long-term strategy is its advance in biorefining. The company’s refineries are already adapted to produce renewable diesel (Diesel R), with current capacity of around 74 thousand cubic meters per month. Petrobras already markets R5 diesel, widely used in public transportation fleets.

Looking ahead, the roadmap for sustainable fuels is becoming clearer:

• Sustainable Aviation Fuel (SAF): Petrobras refineries have been adapted through co-processing routes, allowing airlines operating in Brazil to begin using SAF from 2027, in line with the Future Fuel Law and the mandatory phase of Corsia, the ICAO emissions-reduction program.

• Dedicated Renewable Fuel Plants: The company is running a bidding process to build its first plant dedicated to 100% renewable fuels at the Presidente Bernardes Refinery (RPBC), with capacity of 15 kbpd.

• Pioneering Renewable Operations: By the end of the first quarter, Petrobras will begin operating at Refinaria Riograndense (RPR), the first refinery in Brazil to run entirely on renewable feedstock.

Offshore Investments: Petrobras Drives Decarbonization in the Naval Industry

Even as Petrobras accelerates its refining and biorefining transformation, its core oil and gas operations continue to drive major investments across Brazil’s industrial chain, especially in the naval sector.

Recently, Brazil’s development bank, BNDES, approved R$ 1.98 billion in financing for Bram Offshore Transportes Marítimos to build six hybrid offshore support vessels (PSV 5000 class). These vessels will operate under 12-year charter contracts with Petrobras, transporting supplies between offshore platforms and onshore bases.

The project is expected to generate 620 direct jobs during construction and features hybrid diesel-electric propulsion, battery banks, and shore power connection. From my perspective, this is a clear example of how Petrobras’ long-term operational demand is accelerating the adoption of cleaner, more efficient technologies throughout its supply chain.

How Petrobras Is Shaping Financial Markets While Driving Brazil’s Energy Transition

Taken together, these developments reinforce Petrobras’ dual role in Brazil today. On one hand, the company is delivering strong operational results with near-full refinery utilization, record fuel production, and reduced import dependence. All of this helps sustain the historic rally in the Brazilian stock market. At the same time, the company is steadily advancing toward a more diversified, cleaner, and more sustainable energy matrix. 

From refining efficiency to biorefining leadership and green investments in offshore logistics, Petrobras is not merely adapting to the energy transition, but actively shaping it, while helping anchoring investor confidence in Brazil’s economy.

Green Hydrogen (H2V): Debunking Myths and Why Brazil Cannot Miss the Energy Transition Race

 Green hydrogen (H2V) is recognized by many as the most significant contributor to the global energy transition and the most potent option to decarbonize the earth. However, H2V, like any other innovative technology at the beginning, is not widely accepted and is still not very much understood by the public. Consequently, misinformation and myths that are not going away keep on being circulated through social media. 

The first step is to ensure that these misconceptions are blown away through the provision of simple and factual information. If not, public perception may turn into a barrier for a technology that has the potential to change the energy landscape, industrial practices, and climate policy not just in a region but globally.

Myth #1: Green Hydrogen Is Too Difficult to Store

One of the primary myths surrounding green hydrogen is that it has always been a difficult factor related to its storage. The truth is that hydrogen can be stored very securely and also very conveniently, especially if in the form of gas.

The most common technique is the compression of hydrogen gas into high-pressure cylinders made from either steel or carbon-fiber-reinforced composite. The pressures for which these cylinders are built to last is typically between 200 and 350 bar. This means green hydrogen can be stored at locations that are very similar to those for conventional gas, like the case of compressed natural gas (CNG), but only using specially designed containers for higher pressures.

On the technical side, hydrogen storages are not yet developed. It is a problem where the engineering has reached the point of application and the solutions are already in use.

Myth #2: Transport and Distribution Are Major Barriers

There is another belief that green hydrogen cannot be transported or distributed at a large scale. Actually, hydrogen can be distributed through pipelines the same as natural gas, though at higher pressures and with materials that do not succumb to hydrogen embrittlement.

Steel and metal alloys are used widely for preventing the corrosion and degradation of the materials. Hydrogen given high pressure is stored and transported through the pipelines that are meant for such purpose and allows long-distance transport. Furthermore, hydrogen can also be transported by ordinary gas transport trucks that are modified to take the higher pressure.

In simpler terms, while the distribution of hydrogen is difficult, it is not impossible.

Myth #3: Electrolyzers Are Too Expensive and Depend on Scarce Materials

Electrolyzers generally use catalysts made with platinum-group metals, which include platinum, iridium, ruthenium, and palladium. The extraction of these metals takes place in different parts of the world, like South Africa, Russia, and Canada. The total amount of these metals available to the world is not too much, but still, the current supply is reliable and ongoing.

What is more, the technological advances are quickly changing the electrolyzer designs. Among the advances are the use of polymer electrolyte membranes, the enhancement of recycling methods, and the search for alternative materials. There is nothing that points to the supply-chain issues becoming an unbeatable obstacle to the green hydrogen's production process.

The Largest Energy Transition in Human History

Humanity depended on natural energy sources, like trees, wind, and water, for almost three hundred thousand years. Fossil fuels eventually appeared on the scene only two hundred years ago, causing the environment severe degradation.

The development of green hydrogen indicates a deep change in the carbon-intensive model. It is the biggest energy transition of all time. Like all paradigm shifts, there come myths and opposition. But if Brazil is to take part in the global hydrogen competition it will have no option but to counter the false tales with truth.

Brazil’s First Biogas-to-Hydrogen Pilot Plant: A National Milestone

In the fourth quarter of 2025, the Federal University of Paraná (UFPR) inaugurated Brazil’s first pilot plant dedicated to producing renewable hydrogen from biogas at its Polytechnic Center in Curitiba.

The project, funded through Copel GeT’s R&D program, is unprecedented in the country. It uses organic waste generated daily by UFPR’s university restaurant to produce high-purity hydrogen without consuming water.

This process relies on anaerobic biodigestion to generate biogas, followed by dry catalytic reforming, thermochemical conversion, PSA purification, compression, storage, and conversion into electricity via fuel cells.

“Through biomass, we turn waste into biogas, energy, and fertilizers. Everything that enters the process is reused,” explains Leandro Foldran, R&D manager at Copel GeT.

Paraná as a Secondary Front

In contrast, fertilizer operations in Paraná play a supporting role in Brazil's industrial map. While relevant for regional supply and operational balance, these assets lack the scale, export potential and strategic integration seen in Ceará.

From an investor and policy perspective, Paraná represents continuity. Ceará represents transformation. However, if the Paraná project gains scale, it could represent a profound change in the hydrogen market, especially if we consider the production capacity that this type of hydrogen could achieve in relation to the organic waste produced by both large cities and agribusiness.

Why This Project Matters for Brazil’s Energy Future

Brazil has one of the world’s largest untapped biogas potentials, yet currently exploits less than 5% of its available organic waste. Converting this resource into hydrogen dramatically increases its economic value and strategic importance.

With hydrogen prices potentially reaching US$ 3 to US$ 3.50 per kilogram at scale — below current global benchmarks — biogas-based hydrogen could become one of Brazil’s most competitive energy assets.

More than a scientific breakthrough, UFPR’s pilot plant is proof that Brazil can lead the global transition to low-carbon energy.

The Bottom Line

Green hydrogen is not a distant promise. It is already being produced, stored, transported, and used, safely and efficiently. The real challenge lies not in technology, but in overcoming misinformation and accelerating deployment.

If Brazil acts decisively, it will not only decarbonize its economy but also secure a strategic position in one of the most important energy markets of the 21st century.

The race has already begun.

Green Hydrogen: Ceará Becomes Brazil’s Most Strategic Energy Transition Hub

Brazil is quietly but decisively repositioning itself for the global energy transition, and Ceará has emerged as the centerpiece of this strategy. At the Port of Pecém, the country is backing a US$ 33,1 million green hydrogen (H2V) investment, placing the Northeast of Brazil at the forefront of one of the most competitive and capital-intensive energy markets of the coming decades.

While other regions host smaller or more experimental initiatives, the Pecém project stands out for its scale, logistics and export-oriented design, signaling Brazil government's ambition.

The H2Mover-Pecém is an advanced and environmentally friendly hydrogen project that has managed to get R$ 33.1 million through the highly regarded Northeast Call of Nova Indústria Brasil. This considerable sum is planned to be spent on a project that will ultimately transform heavy transport in Brazil, where the first step will be in the Pecém Industrial and Port Complex (CIPP) in Ceará.

The main aim of the project is to decarbonize the heavy mobility segment, which is still largely untouched and difficult, in Brazil. H2Mover-Pecém is an alliance of several companies, with Grupo Cordeiro as the leading player, and Grupo Unilink Transportes and the AECIPP as partners. The plan is based on a shared infrastructure that is the key to its operation. It will have a stationary pilot plant that is capable of producing up to 100 kilograms of green hydrogen per day, and this will include integrated compression and storage systems. The immediate practical use of the project is further supported by the establishment of a mobile refueling unit, which will be dedicated to heavy vehicles working in the complex, thus making it an integral part of the project.

The first fleet of operational equipment will be a showcase of new technology, consisting of five units, among which are vehicles with hydrogen engines (H2-ICE) and electric vehicles powered by fuel cells (FCEV). A very advanced digital platform made in partnership with the Federal Institute of Ceará (IFCE) will also come into play in monitoring the operational quality, the amount of energy consumed, light emissions that would have occurred and thus avoided.

The H2Mover-Pecém has set itself a 36-month technological development schedule which is clear and intended to be executed in the most efficient manner possible. It is expected that the first vehicles will start operating in 2028 and the transition to the commercial phase will be in 2029. The whole project is built in such a way that it can easily be taken to other areas, not just Pecém, and nationwide highways and logistic corridors can then benefit from it. The whole thing is a win-win; H2Mover-Pecém becomes an essential component of the upcoming Green Hydrogen Hub of Ceará, being a supplier of the real hydrogen consumption, power independence of the CIPP, and ultimately boosting the local job market.

Why the Port of Pecém Matters

The Port of Pecém is widely regarded as one of the most promising green hydrogen hubs in Latin America. Its advantages include:

• Direct access to deep-water port infrastructure, suitable for large-scale exports
• Proximity to renewable energy sources, particularly wind and solar
• Strategic positioning for shipping routes to Europe and Asia, two of the largest future hydrogen markets

By participating in a US$ 33 million hydrogen initiative at Pecém, Petrobras is aligning itself with international decarbonization agendas and signaling readiness to compete in a market expected to attract hundreds of billions of dollars globally over the next decades.

A Strategic Bet on the Energy Transition

The hydrogen project in Ceará for Petrobras is not just a matter of symbolism, in fact, it is a matter of strategy. Green hydrogen is more and more perceived as a crucial solution for the decarbonization of difficult-to-abate sectors such as steel, chemicals, shipping, and aviation. With its hydrogen ambitions rooted in Pecém, Brazil, and  companies like Petrobras, obtains:

• Early access to a rapidly growing global market
• A base for collaborating with international partners
• An avenue for enhancing its portfolio of non-fossil fuel products

This step, for example, could strengthens Petrobras' story of moving from an oil producer to a wider energy company.

Ceará as a Gateway to Brazil’s Hydrogen Future

The emphasis on Ceará reflects a broader shift in Brazil’s energy geography. With modern infrastructure, renewable abundance and global connectivity, the state is fast becoming Brazil’s primary gateway to the hydrogen economy.

The message is clear: the future of energy diversification is being built in the Northeast of Brazil, and it starts at Pecém.

Brazil Records Decline in Poverty and Inequality

Over the past two years, Brazil has undergone one of the most significant processes of social mobility in its modern history. According to a study by Fundação Getulio Vargas (FGV), based on data from the Continuous National Household Sample Survey (PNADC) covering the period from 1976 to 2024, 17.4 million Brazilians moved out of poverty and entered social classes A, B, and C. To put the scale of this shift into perspective, that number is equivalent to the entire population of Ecuador.

As I analyze the data, it becomes clear that Brazil is experiencing a structural change in income distribution at a pace not seen in decades. FGV estimates that the speed of social mobility between 2022 and 2024 was 74% faster than the expansion recorded between 2003 and 2014, another period marked by strong upward mobility. In just two years, the share of the population in classes A, B, and C increased by 8.44 percentage points, with between 13 and 14 percentage points linked to households receiving Bolsa Família and the Continuous Cash Benefit (BPC).

This transformation is not merely statistical. It reflects deeper economic dynamics, especially the recovery of the labor market and the expansion of formal employment. Marcelo Neri, director of FGV Social and author of the study, emphasizes that income from work was the primary engine behind the rise of the middle class. According to him, the protection rule embedded in Bolsa Família encourages formal employment contracts, which may be the clearest symbol of a new middle class emerging from the base of the income distribution.

Beyond that, Brazil’s strong economic growth over the past four years came as a surprise, even to economists. Few expected such performance, and forecasts largely missed the scale of the expansion. In my view, one of the main explanations lies in the massive expansion of income transfer programs, which began during the pandemic under former president Jair Bolsonaro and were later reinforced.

Much of this expansion took place after the Covid-19 pandemic and gained even more momentum as the presidential election approached. Four months before the vote, Jair Bolsonaro’s administration decided to raise Auxílio Brasil — the name given to Bolsa Família under his government — from R$400 to R$600. The move and the increase was widely seen as an attempt to distance the program from its historical association with the Workers’ Party (PT), led by the current president, Luiz Inácio Lula da Silva.

Thus, before the pandemic, Bolsa Família cost around R$30 billion per year. Today, the program alone amounts to roughly R$150 billion annually. Added to this is the Continuous Cash Benefit (BPC), which guarantees one minimum wage to elderly people living in poverty and to individuals with certain debilitating conditions, also exceeding R$150 billion per year. In practice, Brazil moved from a R$30 billion income transfer system to one approaching R$300 billion, a tenfold increase in social spending, not including unemployment insurance and wage bonuses.

When all transfer programs are combined, Brazil now distributes close to R$400 billion per year, effectively operating a welfare-state model. This approach contrasts sharply with the spending cap period between 2016 and 2020, when efforts to contain transfers coincided with weak economic growth averaging just 1.5% per year.

Income transfers played a decisive role in reigniting growth because low-income households spend virtually all of what they earn, injecting demand directly into the economy. This surge in consumption helped explain, for example, why Brazilian industrial output grew 3.5% in 2024.

The strategy helped put Brazil back on a growth trajectory, but it also increased public debt and borrowing needs. Today, the government faces the challenge of financing these programs amid high interest rates, which explains its push to raise funds in financial markets. The Ministry of Finance, led by Fernando Haddad, is fully aware of these constraints and has often clashed with other factions within the government that advocate for even more spending.

This tension now extends to monetary policy. The new Central Bank president, Gabriel Galípolo, faces difficult decisions, including potential interest rate hikes, placing him in a politically sensitive position given past criticism of the Central Bank’s independence and policy direction by members of PT.

In short, income transfers were crucial to Brazil’s recent growth, but the challenge ahead is calibrating social spending while managing debt, inflation, and interest rates in a more restrictive fiscal environment.

In Brazil, social classes A, B, and C are defined primarily by household income. Class C is generally associated with the middle class, composed of families that can meet basic needs while maintaining some level of consumption. Classes B and A include higher-income groups with greater financial stability. In 2024, Brazil reached its highest historical level of participation of middle- and upper-income classes since 1976. The combined share of classes A, B, and C reached 78.18% of the population, with class C alone accounting for 60.97%, while classes A and B together represented 17.21%.

At the same time, the study shows that lower-income groups reached their smallest proportions on record. Class D accounted for 15.05% of the population, while class E fell to 6.77%. For Wellington Dias, Brazil’s Minister of Development and Social Assistance, these numbers confirm the strength of social policies aligned with economic growth. He argues that integrated policies in education, healthcare, and socioeconomic inclusion, combined with GDP growth above 3% per year, have expanded opportunities for employment, entrepreneurship, and income generation. In his view, money reaching millions of low-income Brazilians through programs such as Bolsa Família has acted as a gateway to formal jobs or supported business initiatives, reinforcing a virtuous cycle of growth.

In practical terms, families with a monthly household income between R$4,000 and R$10,000  — a value equivalent to approximately US$1,850 — are typically classified as middle class in Brazil as of 2026. This income range allows households to cover essential expenses such as housing, food, and transportation, while also supporting basic private healthcare, education, and moderate leisure spending. Above this level, families are considered upper-middle class, while those below it tend to remain concentrated in lower-income categories.

Despite this progress, a concerning reality persists. Recent surveys indicate that most Brazilians would struggle to maintain their current standard of living for long if they lost their main source of income. This vulnerability is not limited to the poorest segments of society and affects a significant portion of the middle class as well. Many households operate with little or no financial reserves, revealing a structural weakness in family financial planning.

This picture suggests that even as millions of Brazilians move into the middle class, economic stability remains limited. Income gains are real, but they are not always accompanied by financial education or the ability to save, especially when you're forced to spend your entire salary. In a country where economic shocks are frequent, this combination makes long-term economic security a continuous challenge, even for those who have already climbed several steps of the social ladder.

Petrobras (PETR3; PETR4), Fertilizers and Shareholders: Revival of FAFEN Plants Rekindles Strategic Debate in Brazil

January marks a significant step forward in the restart of Brazil’s nitrogen fertilizer industry, as Petrobras resumes operations at its fertilizer plants in the Northeast. In Sergipe, the FAFEN unit, which had already restarted ammonia production on December 31, began producing urea on January 3. In Bahia, the Camaçari plant completed maintenance in December and is currently in the commissioning phase, with urea production expected to begin by the end of January.

Together, the two plants will produce ammonia, urea and ARLA 32 (Automotive Liquid Reducing Agent), with initial investments of approximately R$38 million in each facility. The restart of the FAFEN units has already generated around 1,350 direct jobs and 4,050 indirect jobs, reinforcing their relevance for regional development.

Production Capacity and Market Impact

The Sergipe plant, located in Laranjeiras, has the capacity to produce 1,800 tonnes of urea per day, equivalent to about 7% of Brazil’s domestic market. The Bahia unit, in Camaçari, can produce 1,300 tonnes per day, corresponding to roughly 5% of national demand. Operations in Bahia also include the Ammonia and Urea Maritime Terminals at the Port of Aratu, in Candeias.

According to Petrobras, the two FAFEN units, together with Araucária Nitrogenados S.A. (ANSA) in Paraná, will be responsible for supplying around 20% of Brazil’s total urea demand.

“Our expectation is to increase domestic production to 35% in the coming years, including a new plant under construction in Mato Grosso do Sul,” said William França, Petrobras’ Executive Director of Industrial Processes and Products.

Strategic Rationale: Reducing Dependence on Imports

Brazil currently imports nearly all the urea it consumes. Petrobras argues that resuming domestic production is a strategic move to reduce external dependence, strengthen the agribusiness supply chain and enhance food security.

The nitrogen fertilizers produced by the FAFEN units are expected to serve not only agriculture, including urea for crops and for animal feed, but also industries such as textiles, paints, and pulp and paper. ARLA 32 production is also highlighted as a contribution to reducing vehicle emissions and supporting environmental goals.

“This is a strategic action,” França emphasized. “It uses natural gas as the main input, expands allocation alternatives for Petrobras’ gas production and generates value for industry, agriculture and the country.” 

The Critical View: Fertilizers as a Costly Detour for Petrobras Shareholders

While the restart of the FAFEN plants has been widely celebrated by regional leaders and industrial policy advocates, market analysts and energy sector specialists warn that Petrobras’ return to fertilizers may revive old problems, particularly for shareholders.

Critics recall that Petrobras previously operated a fertilizer subsidiary, Petrofértil, which failed to make Brazil self-sufficient and generated heavy financial losses, ultimately leading to its shutdown. In their view, the renewed push into fertilizers is driven less by economic rationale and more by geopolitical concerns, especially after Brazil’s exposure to Russian supply disruptions following the Russia–Ukraine war.

For many economists, market analysts and investors, if producing fertilizers in Brazil were economically attractive, the private sector would already be doing it. For them, Petrobras should focus on producing oil and natural gas, rather than subsidizing an industry that has historically only delivered losses

From this perspective, the core issue is competitiveness. Fertilizer production depends heavily on cheap natural gas, something Brazil lacks. 

This dynamic highlights a clear divergence of interests: investors prioritize short-term returns and capital discipline, whereas the Brazilian government frames fertilizer production as a strategic tool to reduce Brazil’s structural dependence on imports.

In 2024, Petrobras reached the milestone of one million individual shareholders on the Brazilian stock exchange. Despite being a publicly traded company, its controlling shareholder remains the Brazilian government, making Petrobras a state-owned mixed-economy company. This structure means that strategic decisions also take national security considerations into account, especially after the war in Ukraine exposed Brazil’s vulnerability and heavy dependence on imported fertilizers. Currently, the country imports more than 80% of its fertilizer needs, largely from suppliers such as Russia and Belarus.

Gas Prices, Environmental Licensing and Structural Barriers

Critics highlight that Brazil’s natural gas is offshore and expensive, unlike Russia or Canada, where abundant and cheap gas underpins global fertilizer leadership. Environmental licensing is also commonly cited as a major obstacle, both for shale gas exploration and for potash mining, particularly in the Amazon region.

As a result, domestically produced fertilizers tend to be more expensive than imported ones, unless production is heavily subsidized, this could reduce short-term shareholders profits. That, in turn, raises concerns among investors and is not good news for PETR3 and PETR4.

Will Fertilizers Become Cheaper for Consumers?

Supporters of the restart argue that domestic production could stabilize supply and potentially reduce costs over time. Skeptics disagree, noting that fertilizer prices tend to follow international benchmarks and that any subsidy would distort market signals.

In theory, cheaper fertilizers could lower food prices, but in practice, margins are usually captured along the chain, and consumers rarely see the full benefit.

There is also concern that subsidized fertilizers could undermine efficiency in agribusiness and weaken Brazil’s long-term competitiveness by masking structural inefficiencies.

Industrial Policy vs. Shareholder Value

The debate reflects a broader tension within Petrobras’ strategy. On one side, the company and labor organizations argue that fertilizers fit into a re-verticalization strategy aligned with energy transition, bio-refining and national development goals. On the other, investors fear mission creep.

From the industrial policy standpoint, Petrobras’ Business Plans for 2025–2029 and 2026–2030 explicitly mark a return to fertilizers, reversing the divestment cycle of 2016–2022. Around US$1 billion has been allocated to fertilizers over the next five years, alongside expanded investments in natural gas processing.

Supporters see this as rebuilding strategic capabilities dismantled in the past decade. Critics see a dilution of focus.

Analysts indicate that Petrobras is one of the world’s best offshore oil producers. For them, that’s where capital should go, especially with new frontiers like the Equatorial Margin.

What This Means for Petrobras (PETR3; PETR4) and Its Shareholders

For shareholders, the fertilizer debate introduces uncertainty. In the short term, the restart of FAFEN plants supports regional economies and aligns with government priorities. In the long term, the key question remains whether Petrobras can operate fertilizers profitably without repeating past losses.

The market reaction is likely to balance optimism about industrial recovery with caution over capital discipline. As Brazil seeks to reduce its dependence on imported fertilizers, Petrobras finds itself once again at the center of a strategic dilemma: serve as an instrument of national policy or focus strictly on maximizing shareholder returns.

The answer will shape not only the future of fertilizers in Brazil, but also the investment thesis behind Petrobras shares in the years ahead. However, we cannot overlook the fact that Petrobras is widely recognized as one of Brazil’s most innovative companies, particularly in the energy sector. Its leadership in innovation is largely driven by its pioneering work in ultra-deepwater oil exploration technologies, an area in which the company is regarded as a global benchmark. The development of the pre-salt layer, one of the largest oil discoveries of the century, stands as a concrete example of how technological capability has translated into operational success.

This culture of innovation is further reinforced by the work carried out at Cenpes (Petrobras Research Center), one of the largest R&D hubs in Latin America, responsible for developing technologies that increase efficiency, reduce costs and improve sustainability across the energy value chain.

From this perspective, Petrobras’ technological expertise could also prove decisive in the fertilizer segment. Its ability to optimize industrial processes, manage complex operations and integrate natural gas supply chains suggests that, under the right economic and regulatory conditions, the company may be able to operate fertilizer production successfully. If so, Petrobras would not only remain competitive in global energy markets, but also leverage its innovation capacity to expand into strategic industrial segments, contributing to Brazil’s long-term energy and food security.

China’s Strategic Pivot in Latin America: Trade Wars, Electric Vehicles, and the Venezuela Crisis

As the Mercosur-EU agreement reshapes trade dynamics, Beijing may begin to recalibrate its influence in the Western Hemisphere amid growing tensions between Washington and Caracas.

The geopolitical landscape of Latin America is undergoing a seismic shift. From the bustling automotive plants in Brazil to the oil-rich fields of Venezuela, China is meticulously evaluating its position. This strategic reassessment comes at a critical juncture, marked by the finalized Mercosur-European Union trade agreement and a volatile political transition in Venezuela that has drawn the direct intervention of U.S. President Donald Trump.

Beyond the well-known consequences, all the actions taken by the United States in Venezuela had an undeniable practical result: Brazil lost part of its diplomatic influence in South America in the face of US actions that, for many, bordered on piracy and the most hardline imperialism possible.

However, Trump, who controls the most powerful military machine on the planet, and doesn't seem at all concerned about the possible repercussions of this action, is going foward. The US action in Venezuala practically overrides international law, defies the legal order of the US itself, trampling over US Congress. In the end, this US action undermines, perhaps irreversibly, the international institutional arrangement that was designed after the Second World War.

This could obviously interfere with decades of effort by the Brazilian government in defending international trade and multilateralism. Brazil's largest trading partner, China, may perhaps be rethinking some of its strategies in the region

The Mercosur-EU Deal: A Challenge to China’s Trade Dominance?

For years, Brazil has sought to diversify its trade partners to reduce its heavy commercial dependence on China. The Mercosur-EU agreement is a cornerstone of this strategy. By opening the Brazilian market to European imports, including a phased reduction of tariffs on automobiles over the next 18 years, the deal aims to create a more balanced trade portfolio.

However, this move might create some "noise" in the Brasília-Beijing relationship. China has recently made multi-billion dollar investments in Brazil’s automotive sector, with giants like GWM, Geely, and BYD establishing major manufacturing hubs in São Paulo, Paraná, and Bahia.

Despite the potential for increased European competition, Chinese industry experts remain unfazed. The global nature of the automotive supply chain means that many "European" cars imported under the new agreement may actually be Chinese brands manufactured in Europe. Conversely, Brazil-made Chinese vehicles could soon find their way into European markets, turning a potential trade barrier into a cross-continental opportunity.

Venezuela: The Frontline of the U.S.-China Resource War

The crisis in Venezuela remains the most contentious point of friction between the world’s two superpowers. While the U.S. administration has framed its intervention as a move to secure "its backyard," analysts suggest the primary objective is to halt Chinese expansionism.

Contrary to popular belief, Venezuela is not China's primary oil supplier, accounting for only 4% of its imports. However, Beijing’s interests are deeply financial and structural. With over $60 billion in loans and 600 joint projects, China is heavily invested in Venezuela’s long-term stability.

"The U.S. cannot deliver what Latin America needs today: massive investment in infrastructure. China has demonstrated this capacity with hundreds of billions of dollars already deployed across the region," notes geopolitical analyst Elias Jabbour.

The Rise of Delcy Rodríguez and the Future of Chavismo

A significant development in the Venezuelan saga is the emergence of Delcy Rodríguez as a central figure in negotiations. A "root-level" Chavista with deep political lineage, Rodríguez is seen as a pragmatic leader capable of navigating high-stakes diplomacy with the Trump administration.

The current shift suggests a potential "Chavismo without Maduro" scenario. While the U.S. seeks a more palatable partner for oil negotiations, the social and military foundations of Chavismo remain intact. For Beijing and Moscow, the failure of a rapid "regime change" in Caracas reinforces their support for a multipolar approach, where Latin American nations maintain sovereignty over their natural resources.

Multipolarity and the "Safe Haven" of Brazil

As the region becomes a "minefield" of geopolitical tensions, China may become more calculated in its investments. This presents a unique opportunity for Brazil. By positioning itself as a "safe haven" for Chinese capital, Brazil can attract the infrastructure and industrial investments that the U.S. is currently unable or unwilling to provide.

However, things are still moving towards consolidating this scenario. Proof of this was China's decision, at the beginning of 2026, to impose import tariffs on meat produced in Brazil.

China announced that starting January 1, 2026, it will impose an additional 55% tariff on Brazilian beef imports exceeding a quota of 1.1 million metric tons. Imports within the quota will continue to be taxed at 12%. In 2025, China imported 1.7 million tons of beef from Brazil, meaning that, if volumes remain unchanged, around 600,000 tons will be subject to the higher tariff.

The measure will not affect Brazil alone. Argentina, the United States, Uruguay and Australia will also face quotas, with the same 55% surcharge applied to shipments above their respective limits. According to Chinese authorities, the policy aims to protect domestic producers, who have been investing to expand national beef production.

Strategic challenge for Brazil

The announcement poses a significant challenge for Brazil’s government and agribusiness sector, given the country’s heavy exposure to the Chinese market. Brazil is the fifth-largest agribusiness producer globally, accounting for 2.6% of world output, and the third-largest exporter, with 8.4% of global exports. It also holds the largest agribusiness trade surplus in the world and exports to more than 150 countries.

Meat products represent the second-largest category of Brazilian agribusiness exports (18%), trailing only the soy complex (36%). China is the top destination, absorbing 31% of Brazil’s agribusiness exports, with beef as a standout product.

Heavy reliance on China

Brazil is the world’s largest beef producer, with output of 12.4 million tons, and the second-largest exporter, shipping roughly 30% of its production abroad. China accounts for 48% of Brazilian beef exports, while Brazilian shipments supply 54% of China’s total beef imports.

While parts of Brazil’s agribusiness sector had already anticipated the introduction of quotas and surcharges, the new policy is expected to force market adjustments. It also reinforces the growing reality that international trade is increasingly being used as a geopolitical tool, reshaping global agricultural flows.

 

Brazil, Hong Kong and Singapore Help Boost U.S. Trade Surplus Under Trump in 2025

According to the United States government's official statistics, Brazil was one of the main contributors to the positive trade results of Donald Trump in 2025, together with the Asian financial centers of Hong Kong and Singapore.

During the first half of the last year, the U.S. enjoyed a trade and services surplus of US$9.2 billion with Brazil, making the country one of the most favored partners of Washington. Only the Netherlands stood above with a surplus of US$20 billion.

Nevertheless, according to a report by ICL, experts point out that the Dutch number is skewed by structural factors. A lot of products that are being imported to the European Union are recorded through the Port of Rotterdam, which leads to the U.S.-Netherlands trade figures being overstated. Also, the substantial impact of the financial services sector on the Dutch economy has a strong effect on the final balance.

Excluding these distortions, Brazil stands out, outperforming several major economies according. The U.S. posted a surplus of US$8.9 billion with Singapore, US$8.6 billion with Switzerland, and US$6.2 billion with Hong Kong. Other countries contributing to positive balances included the United Kingdom (US$5.4 billion), Australia (US$5.2 billion) and Saudi Arabia (US$3.3 billion).

Despite Trump’s aggressive efforts to shrink America’s trade gap, the U.S. continues to run large deficits with key manufacturing economies. The biggest shortfalls remain with Mexico (US$50.3 billion), Vietnam (US$44.2 billion), Taiwan (US$34.4 billion), China (US$33.1 billion) and Germany (US$15.8 billion).

Brazil’s role extends beyond services

When services are excluded and only goods trade is considered, Brazil again appears among the countries helping the U.S. narrow its deficit. Official figures from October show U.S. trade surpluses in goods with Switzerland (US$7.3 billion), the United Kingdom (US$6.8 billion), the Netherlands (US$5.1 billion), Hong Kong (US$2.8 billion) and Brazil (US$2.7 billion), ranking fifth.

By contrast, the U.S. continues to face a deep goods trade deficit, totaling US$17.9 billion with Mexico, US$15.7 billion with Taiwan, US$15 billion with Vietnam, and US$13 billion with China.

Brazilian Panettone Expands to Asia and Oceania, Reaching 50 Countries Worldwide

This year, Abimapi (the Brazilian Association of Biscuit, Pasta, and Industrialized Bread, Cake and Panettone Industries) is also celebrating the expansion of Brazilian panettone into new markets across Asia and Oceania, including Australia, China, Hong Kong, New Zealand, and Singapore.

Panettone is a traditional Italian sweet bread, originally from Milan, made with a soft, aromatic dough enriched with candied fruits and raisins and a distinctive vanilla aroma. Over time, it has become a symbol of the year-end holiday season in Brazil and around the world.

Overall, Brazilian panettone is now sold in around 50 countries across all continents

Tariffs, politics and partial rollbacks

The sharp increase in the U.S. surplus with Brazil occurred during a period when tariffs and trade barriers were imposed on Brazilian products. At the time, Trump framed the measures as retaliation over the treatment of former Brazilian President Jair Bolsonaro. Over time, however, several of these tariffs were gradually lifted.

Even so, Brazilian exports still face minimum tariffs of around 10% to enter the U.S. market, while steel and other industrial products can be taxed at rates exceeding 25%.

Deficit narrows, but imbalance remains

According to the U.S. Census Bureau and the Bureau of Economic Analysis, the American economy still runs an overall trade deficit with the rest of the world. However, that gap has been shrinking rapidly since Trump expanded tariffs on both rivals and allies.

In October 2025, the U.S. trade deficit stood at US$29.4 billion, a sharp decline from US$48.1 billion in September, representing a reduction of US$18.8 billion in just one month.

US-Venezuela Crisis and the Future of Oil: How Petrobras (PETR3; PETR4) is Strengthening its Position with the Búzios Field

The crisis between the US and Venezuela has immediate and potential medium-term implications for global energy markets, particularly crude oil prices and investment flows.

Brazil’s national oil company Petrobras has been steadily increasing production in the pre-salt Santos Basin, with the FPSO P-78 platform (Búzios 6) starting production late December 2025. It can produce up to ~180,000 barrels of oil per day plus significant volumes of natural gas, helping raise the Búzios field’s total capacity to over 1.15 million barrels per day.

More broadly:

• Búzios is already Petrobras’ largest production hub, with multiple FPSOs online and plans for still more through 2030.

• Petrobras reported strong production and financial results through 2025, with robust cash flow and high offshore output, underpinning its growth targets.
  

However, energy markets have been volatile, with Brent oil prices softer at times, and geopolitical shocks like the Venezuela operation tend to inject short-term volatility, risk premia in oil prices, and uncertainty for investors.

For Petrobras, greater global supply, especially if Venezuelan oil re-enters markets under U.S. control, could exert downward pressure on prices. However, diversified Brazilian production and long-term infrastructure projects likely provide resilience.

Current State and Outlook for Petrobras

Petrobras continues to:

• Deliver strong production growth from the pre-salt, especially Búzios.
  

• Expand natural gas exports, boosting Brazil’s energy mix.
  

• Maintain profitable operations with competitive production costs.
  

Near-term risks include:

• Global oil price fluctuations.
  

• Environmental and regulatory challenges (e.g., drilling delays in some basins).
  

Medium- to long-term growth remains anchored by deepwater assets such as Búzios, with projected further FPSO deployments and infrastructure investments through the end of the decade.

The U.S. action in Venezuela has intensified geopolitical tensions and will likely ripple through global energy politics. For Petrobras, the immediate operational outlook remains strong due to ongoing expansion in the pre-salt and rising output. Global market volatility may continue, but Brazil’s offshore production and new platforms like Búzios 6 position Petrobras to weather external shocks while pursuing growth.