Government extends oil export tax for 60 days, weighing on producers

The decision to maintain the tax was made amid international uncertainties and the new developments in the conflict between the U.S. and Iran. Some companies in the sector have taken legal action against the tax and hoped that the decree would lapse in Congress.

According to Datamar data, Brazilian crude oil exports fell 12% year to date in the January-May period. The chart below provides an overview of the figures recorded in recent years:

Crude Oil Exports | Jan 2023 – May 2026 | WTMT

Source: DataLiner (click here to request a demo)

An industry source expressed surprise at the decision, arguing that the risk of supply shortages does not hold since the country’s refining capacity is nearly fully utilized. Additionally, the source pointed out that the government had already achieved the necessary revenue from this tax due to the higher oil prices in recent months through royalties and special participations.

Decio Oddone, former director-general of the National Agency of Petroleum (ANP) and former president of Brava Energia, stated that if the adoption of the export tax with oil prices at US$100 per barrel was a bad signal, maintaining the tax at a lower price level is even worse. “This kind of measure, repeatedly adopted, undermines the country’s ability to attract investments,” Oddone said.

According to Citi analysts Gabriel Barra, Pedro Gama, and Andrés Cardona, Prio is the most affected by the measure, followed by Brava Energia and, to a lesser extent, Petrobras. However, the analysts note that Petrobras received R$4.7 billion in fuel subsidies, an amount sufficient to offset the negative impacts caused by the extended taxation on exported oil.

From XP’s perspective, the extension of the tax exacerbates the impact on the cash flow of oil companies. Analyst Régis Cardoso reports that Brava Energia will be the most penalized by the decision, with a loss equivalent to 1.1% of the company’s market value, followed by Prio (0.8%) and Petroreconcavo (0.7%). The impact on Petrobras would correspond to 0.4% of its market value, but in absolute terms, it will bear the largest volume of losses resulting from the tax extension, estimated by XP at US$400 million.

The Brazilian Institute of Petroleum, Gas, and Biofuels (IBP) stated that the government’s decision to maintain the taxation through administrative means does not rectify the legal, economic, and institutional flaws of the charge. The tax, it asserts, has negative impacts on production projects, investment plans, and business decisions. The entity expressed regret over the decision to maintain the charge, “circumventing the due legislative process.” It also offered to engage in dialogue with the government on the issue.

“Changing the form does not alter the essence of the tax measure: it is a revenue-driven tax applied to a strategic activity that is capital-intensive and relies on stable long-term rules,” said the IBP in a statement.

Thiago Silva, a partner in the Oil and Gas area of Lobo de Rizzo Advogados, stated that maintaining the tax alters the legal basis invoked by the government. While the MP linked the revenue to expenses with diesel subsidies, the new Camex decision is presented based on the specific legislation of the export tax, under the justification of market regulation and the preservation of internal supply amid escalating tensions in the Strait of Hormuz.