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Despite a new export tax, Brazilian oil exports have jumped to a monthly record-high this month, Reuters reported on Friday, quoting government data and industry experts.
Brazil’s oil exports soared by 75.4% year over year between March 1 and 24, per data from foreign trade agency Secex, as oil producers did not have time to relocate oil cargoes after a surprise export tax was announced in early March.
The Brazilian government announced at the start of this month that it would collect taxes on crude oil exports for four months in a bid to offset the effects of an earlier decision to keep fuels tax-exempt.
That decision, however, was made without consulting the industry, and it will increase uncertainty about future investments in Brazil’s oil and gas resources, according to Shell, one of the large foreign operators in the South American country.
Shell, together with other international oil majors, in early March filed an injunction against the new oil export tax that the Lula da Silva government introduced surprisingly as of March 1.
Shell has been joined by the local subsidiaries of TotalEnergies, Repsol, Equinor, and Portugal’s Galp in fighting back against the government’s decision.
“This measure, which was announced with no significant consultation with the industry, brings uncertainty to new investment decisions, negatively impacting the country’s competitiveness in the upstream sector – one where Brazil carries significant geological potential,” Shell told Bloomberg.
According to the Brazilian government, the new tax, which will be in place between March and July, will provide Brazil with a better fiscal balance and will help offset losses incurred from not hiking fuel prices in accordance with market prices.
Brazil is one of the world’s biggest crude oil producers not part of the OPEC+ alliance, which is limiting supply by 2 million barrels per day (bpd) through the end of this year. Brazil, alongside the United States, Norway, Canada, and Guyana, will be the main driver of liquids supply growth from outside OPEC and the OPEC+ alliance this year, the cartel said in its latest Monthly Oil Market Report (MOMR) published in the middle of March.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com