Tension in the Middle East to boost sales from Brazil to the U.S.

The intensification of the conflict in the Middle East could have an impact on Brazil-United States trade if oil prices are affected, given the relevance of the commodity and its products in bilateral exchanges, the American Chamber of Commerce for Brazil (Amcham Brasil) said. Total Brazilian shipments to the U.S. are expected to increase in 2024. Exports to the country grew above the average of the total volume shipped by Brazil in the first quarter and helped make up a $855.6 million surplus—the first for the period in 16 years.

Top Exports to Middle Eastern Countries | Jan-Feb 2024 | TEU

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Crude oil is the main Brazilian product exported to the U.S. and accounted for 19% of total revenue from shipments to the country between January and March. In Brazilian imports from the U.S., fuels are the second item, representing 9.9% of the purchases. The value of this import, however, decreased by 46% from January to March this year compared to the same period last year.

Among fuels, the main item is diesel, a product in which Americans have faced fierce competition from Russia. Abrão Neto, CEO of Amcham, points out that the preliminary analyses following recent attacks that increased tension in the Middle East indicate a still limited impact on oil prices, but the scenario has to be closely monitored.

According to the Brazil-United States Trade Monitor survey released by Amcham, Brazilian sales to the country grew 19.5%, a rate that is five times greater than the 3.2% increase in total exports by Brazil. Considering the bilateral trade balance, the increase in shipments led to the first surplus in a first quarter since 2008.

For Abrão Neto, the mark is noteworthy. However, he points out that bilateral relations have indicated a balance in trade. He calls attention to the trend of an increasing performance of the two-way trade—imports and exports combined. “There was an increase in the two-way trade of almost 5% compared to the first quarter of 2023, to reach $18.8 billion, marking the second-best number for the period,” he highlights. The amount, according to Amcham data, is second only to the $19 billion seen in the first three months of 2022.

“There was an impressive performance in exports to the United States. In the first quarter, we had a record for the period both in value and quantity.” The increase in volume achieved 33.1% in January to March 2024 compared to the same months last year.

The good performance, according to the CEO, was not isolated, as the increase was spread across exports. Among the 10 main products Brazil exports to the U.S., there was an increase in value in nine of them, the CEO said. In volume, Amcham data shows an increase in eight items. Shipments of the main exported item, crude oil, totaled $1.83 billion from January to March, more than double the $755 million in the same months of 2023. In addition to booming demand from the U.S., the increase can be explained by growing oil production in Brazil, according to Amcham. Pig iron, fuel, and aircraft also posted an increase in value in the same time frame. Of the chief ten products sold from Brazil to the U.S., eight are from the manufacturing industry.

Abrão Neto emphasizes the increase in exports of industrial goods, which currently represent 75% of shipments to the U.S. and posted a new record value from January to March this year, with a total of $7.3 billion, an increase of 5.7% over the same months of 2023. The value shipped in industrial goods to the U.S., he said, exceeds the amount allocated to the two main commercial blocs that are Brazil’s partners in exporting this type of product. According to the Amcham survey, Brazil exported $4.9 billion in industrial goods to the European Union from January to March and another $3.9 billion to Mercosur.

“Our expectation for 2024 is for growth in Brazilian exports to the U.S. Whether we are going to maintain a double-digit increase is something to be monitored, but we expect to keep the dynamism of bilateral trade, enabled by the expected growth of both economies.”

On the import side, there was a 7.8% drop in the total purchases coming from the U.S. However, Abrão Neto points out that the reduction does not reflect the general trend in Brazilian purchases of American items, as the drop resulted from the performance of fuel oils, whose imports fell by more than 45% in the first quarter of this year compared to the same period in 2023.

Fuel oil imports fell by some $760 million from January to March this year compared to the same months in 2023. The number is nearly the same as the $758 million difference in total Brazilian imports from the U.S. for the same period. For Abrão Neto, the drop is in line with the global scenario of change in the supply of oil and oil products, a trend that has been observed for around two years. Another factor, according to him, is the supply of U.S. diesel, which, according to some surveys, has decreased this year.

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