Trump rupture with Iran sends oil soaring, complicates Brazil's fertilizer and inflation outlook.

The rupture of the memorandum of understanding between Washington and Tehran — confirmed by President Donald Trump on Wednesday morning, when he declared the agreement "over" and authorized fresh bombing raids against Iran — abruptly reshuffled the global risk axis and reached Brazil at a moment when the country was already navigating a profound structural reconfiguration of its commercial and financial relationships with the world. Brent crude jumped 5.77%, to $78.44 a barrel on the Intercontinental Exchange, while WTI advanced 5.54%, to $74.34 on the Nymex. Petrobras common share ADRs rose 3.54% in New York pre-market trading — the only immediate positive signal for Brazil on a day when the EWZ index retreated roughly 1% and the dollar, which had already closed at R$5.152 the previous session (up 0.39%), was once again applying pressure. Iran's Revolutionary Guard confirmed strikes against American military targets in Bahrain and Kuwait, undermining any near-term prospect of the Strait of Hormuz reopening.

The geopolitical shock finds Brazil in an ambiguous position. On one hand, Petrobras benefits directly from the surge in prices. On the other, the country faces a fertilizer crisis whose center of gravity runs precisely through the Middle East — one that had already forced an unprecedented logistical reconfiguration of the agricultural inputs chain. In the first half of the year, Brazil imported 1.3 million tonnes of potash fertilizer from Turkmenistan, a volume that was practically nonexistent a year earlier, according to Folha de S.Paulo. The renewed military escalation heightens uncertainty over input routes and prices at a particularly delicate moment: agribusiness posted record semester exports of $86.5 billion, up 6% from 2025, and beef exports reached $9.85 billion, also an all-time high, according to Abiec. That exceptional performance now sits under a double threat — rising input costs and an El Niño event that the U.S. Climate Prediction Center estimates has a 63% probability of reaching very strong intensity between November and January, a level that would place it among the most severe since 1950, according to analysis by Itaú BBA.

While the Middle East conflict rewrites cost and supply variables, the commercial front with the United States remains the political risk of most immediate urgency. One year after the 50% tariff hike announced by Trump in July 2025, the U.S. share of Brazilian exports hit the lowest level in the entire trade balance historical series, which dates back to 1997. The July 15 legal deadline for concluding the Section 301 investigation — which contemplates an additional 25% tariff on Brazilian goods over allegedly unfair trade practices — is approaching with no deal in sight. Minister Márcio Elias Rosa confirmed that the government expects to hold at least one more technical meeting and another political one with Washington before the deadline, possibly this week, involving Foreign Minister Mauro Vieira and U.S. Trade Representative Jamieson Greer. Rosa ruled out any opening of the Brazilian market to American ethanol without equivalent concessions for Brazilian sugar, directly pushing back against the proposal from Senator Flávio Bolsonaro, who took part in USTR hearings and went so far as to defend eliminating the import tax on American ethanol.

Pressure on Brasília is also coming from within the U.S. system itself. Tesla, Coca-Cola, Nestlé, Siemens, eBay, and Faber-Castell filed comments with the USTR asking that the tariff not be implemented. Brazilian industrial associations such as Abimaq and Abicalçados warned during the hearings that taxing Brazilian machinery and equipment would open the door for China to fill the void — an argument that resonates directly with Washington's concerns about dependency on Beijing across supply chains. The irony is considerable: Brazil is issuing its first panda bonds — sovereign notes denominated in yuan in China's domestic market — diversifying its financing architecture precisely as Washington tries to punish it for trade practices that, according to Brasília, are based on ignored evidence and arbitrary conclusions.

In the domestic market, the day delivered contradictory signals about the trajectory of inflation and monetary policy. The IPC-S for the first four-week period of July rose just 0.31%, down from 0.64% in the previous June reading, with the Food group essentially stabilizing at a 0.01% variation. For the first time since the outbreak of the war with Iran in February, economists surveyed by the Central Bank cut their forecast for this year's IPCA — a move that XP corroborated by trimming its projection from 5.5% to 5.2%, though with caveats about upside risks. Itaú Asset, run by Bruno Serra, former Monetary Policy director at the BC, goes further and projects IPCA at 4.6%, well below the Focus median of 5.3%, betting that Copom has room to keep cutting the Selic without pauses in the second half — a stance that runs directly against market consensus. The renewed escalation of the Middle East conflict, with oil sharply higher, complicates that thesis and will need to be factored into upcoming revisions.

In the auto sector, Anfavea revised its projections upward and now forecasts vehicle sales above 3 million units in 2026, which could translate into the best result since 2014, driven by light vehicles — though trucks continue on the opposite trajectory, with registrations down 9.4% in the first half. Stellantis began domestic production of the Jeep Avenger in Porto Real, while Gol received its first Airbus A330-343 to inaugurate the Galeão-New York route on Wednesday. On the fiscal front, the government's proposal to raise the MEI ceiling would cost R$8.1 billion between 2027 and 2029, according to estimates sent to the lower house. The government also proposed restricting rural debt renegotiations to producers with documented climate losses — a position that puts Brasília on a collision course with the agribusiness caucus in Congress. The National Treasury, for its part, signaled that it intends to revisit the expansion of tax-incentivized bonds, whose proliferation has been disrupting NTN-B auctions and creating growing distortions in the fixed-income market.

What to watch in the coming hours and days is a dense cluster of variables that rarely converge with such simultaneity: the Brazil-U.S. ministerial meeting ahead of July 15, which will determine whether the additional 25% tariff materializes or gives way to negotiation; the trajectory of oil and its implications for inflation and monetary policy, just as the market was beginning to price in relief; the evol