• 11 hours Retail On Pace For Most Bankruptcies And Store Closures Ever In One Year: BDO
  • 10 minutes America Could Go Fully Electric Right Now
  • 1 day Majors Oil COs diversify into Renewables ? What synergies forget have with Solar Panels and Wind Tirbines ? None !
  • 35 mins Clean Energy Is Canceling Gas Plants
  • 8 mins GAME CHANGER: MIT Startup Commonwealth Fusion says Commercial Product by early 2030s ! THIS CHANGES EVERYTHING..
  • 4 hours OP article : "Trump blasts Biden Fracking Plan . . . "
  • 1 hour America's Frontline Doctors - Safely Start Living Again!
  • 31 mins Biden denies fracking ban
  • 7 hours "COVID Kills Another Oil Rally" by Tom Kool 10/16/2020
  • 1 day Vote Biden for Higher Oil Prices
  • 1 hour Conoco Pledges ‘Net-Zero’ Emissions in Break With U.S. Rivals
  • 2 days Tesla Model 3 Is September's Top Selling Car of All Vehicles in Switzerland
  • 2 days France Sees 10.6% EV Market Share In September — 4× Growth Year On Year
  • 2 days TX NATGAS flaring
  • 22 hours A sneak peak into the US election
Nick Cunningham

Nick Cunningham

Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. 

More Info

Premium Content

Covid-19 Crisis Could Crush Brazil’s Oil Boom

The coronavirus is spreading like wildfire in Brazil, and the country’s oil industry could get dragged down with it.  “Brazil has the worst COVID growth rate of any G20 country: the pandemic is totally out of control,” Raymond James wrote in a report, explaining its reason for downgrading its recommendation for Petrobras to Market Underperform. 

Brazil just passed the UK to become the country with the third-largest number of COVID-19 cases, at over 270,000. Only the U.S. and Russia have more. Worse, the death rate is climbing fast. 

The government of President Jair Bolsonaro has aggressively opposed lockdown measures and even social distancing recommendations. Brazil is the only major country in Latin America that hasn’t had a national lockdown. Bolsonaro has downplayed the significance of the coronavirus, calling it a “little flu.” 

Mass graves tell a different story. But when he was asked about the rising number of deaths, he said, “So what? I’m sorry. What do you want me to do?” 

Nightly panelaço protests, in which people bang pots and pans at their balcony windows, became a fixture in Sao Paulo even before the recent explosion in COVID-19 cases. The protests, which included chants of “Bolsonaro out!” highlight the growing political danger to the president. 

Bolsonaro’s first health minister, Luiz Henrique Mandetta, was highly popular. But after contradicting the president’s message on COVID-19, he was fired. His successor, lasted only a few weeks. “The health ministry is a ship that has lost its way,” Mandetta said on Monday. 

Related: Natural Gas Drillers Face Price Meltdown As Storage Fills Fast
Roughly 18,000 people have already died from the virus in Brazil, and the number of cases continues to climb rapidly. The lack of widespread testing suggests the true number is even higher. The Wall Street Journal published a harrowing account of Brazilian nurses on the front lines. Suffering from a lack of equipment and a lack of direction from higher up, nurses are dying at an alarming rate. 

Against this chaotic backdrop, it is perhaps unsurprising that Brazil is the country with one of the highest R number. The R number refers to the reproduction number, or how many people a given infected person spreads the virus to others. If the R number is under 1, the spread is slowing. Brazil’s was over 2, according to a May 9 article in The Lancet.

Outrage with the president is on the rise. Bolsonaro is now reeling from overlapping political, economic and health crises. To complicate matters further, Justice Minister Sergio Moro, who presided over the sprawling Lava Jato investigations from a few years ago, resigned in late April and accused President Bolsonaro of trying to fire the national police chief to interfere with investigations. The fight with Moro alone could sink Bolsonaro. 

Related: The World’s Most Controversial Oil Frontier Falls Out Of Favor With Big Banks

“We see no way to avoid a national lockdown, and for a lengthy period,” Raymond James said in a note. The investment bank said that Brazil’s COVID-19 response “stands out globally for its extreme dysfunction,” and the data is “stunningly bad.” 

The country’s oil industry, and especially, Petrobras, will be hit hard. Petrobras has been directly impacted by the coronavirus, with over 261 workers at the company infected, as of late April. In mid-May, the company had to withdraw workers from an offshore platform because workers had been infected. 

At first, Brazilian regulators suspended all oil and gas tenders scheduled for this year. Petrobras also sought to cut production, but then reversed course on higher demand in China. 

But Brazil cannot simply ignore the coronavirus and simply carry on as normal, as Bolsonaro prefers. With the death toll climbing at a frightening rate, the political backlash is mounting. Lockdowns appear inevitable, Raymond James says, which would “not only exacerbate pressure on Petrobras’ downstream segment, but also worsen macro conditions, with ramifications for the currency and sovereign credit rating, to which Petrobras is exposed.” 

By Nick Cunningham for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News