Freight rates rise as Middle East conflict coincides with Brazil harvest shipping peak

Rising oil prices triggered by the conflict in the Middle East are pushing up freight costs just as Brazil’s agribusiness sector enters the peak period for transporting crops from farms to ports, increasing pressure on producers already facing weaker grain prices in international markets.

On March 6, Brent crude closed at $92.69 per barrel after rising 27% during the first week of the conflict. If the war intensifies and prices approach $100 per barrel, diesel prices in Brazil could increase by between 0.40 reais and 0.70 reais per liter, according to ValeCard, a company that provides fleet management and fuel control services.

Marcelo Braga, ValeCard’s director of mobility and operations, said the estimate assumes the Brazilian real trading between 5 and 5.50 per U.S. dollar and a full pass-through of oil price increases to the domestic market. The extent of the pass-through will depend on Petrobras’ pricing policy, as well as shipping routes, demand levels and cargo types.

The conflict has already affected fuel prices. According to data collected by Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP) between March 1 and March 6, the price of S10 diesel rose 1%, or six cents per liter, from 6.09 reais to 6.15 reais.

Maurício Buffon, president of the Brazilian Soybean Producers Association (Aprosoja Brasil), said freight and fuel expenses account for between 25% and 30% of total production costs in farming.

“That percentage covers the cost of moving the crop from the field and transporting it, but diesel is also used within farms for other operations, such as fueling harvesting machinery,” he said.

According to Buffon, this will be the first time farmers face simultaneous increases in fuel and fertilizer prices. Iran is a key supplier of urea fertilizer to Brazil.

“We had higher fuel costs during the COVID-19 pandemic, but fertilizers were cheaper at the time,” Buffon said. “Now around 50% of production costs could be affected, depending on how long the war lasts.” Fertilizers account for about 20% of farm expenses.

Logistics constraints add pressure

Even before the Middle East conflict began, Brazil’s agribusiness sector was already facing logistical constraints during the 2025/26 harvest season.

The harvest is progressing faster than last year, which boosted demand for trucking services in January and February. The earlier harvest coincided with heavier rainfall in northern Brazil, which disrupted truck traffic along a road section near Miritituba in Pará state that connects to ports in the so-called Northern Arc export corridor.

“This situation led to halted shipments, longer waiting times and adjustments in freight rates to attract drivers and compensate for idle time faced by truckers in the region,” said Thiago Péra, coordinator of the Agroindustrial Logistics Research and Extension Group at the Luiz de Queiroz College of Agriculture (Esalq-Log).

Fernando Bastiani, a researcher at Esalq-Log, estimates that these disruptions alone pushed freight rates for the Northern Arc up by about 5%.

Péra added that higher diesel prices could also remain a challenge during the off-season, when transportation costs typically fall but may remain elevated this year.

Another factor that could continue to drive freight rates higher is Brazil’s minimum freight rate table for road transport, which includes an automatic adjustment mechanism whenever diesel prices rise by 5%.

Higher oil prices could also lift soybean oil prices, the main feedstock used to produce biodiesel in Brazil.

“Yes, more expensive soybean oil could become another source of cost pressure because it raises the price of biodiesel,” said Jerônimo Goergen, president of the Brazilian Biofuels Producers Association (Aprobio).

However, Goergen noted that fluctuations in oil prices and the exchange rate typically have the largest impact on freight costs.

Source: Globo Rural

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