Brazil posted a record first-quarter trade surplus of US$14.2 billion as crude shipments jumped and buyers rerouted away from Middle East supplies amid the Iran war. Crude exports rose to US$12.56 billion, with China taking 57% of Brazilian volumes in Q1 and 65% in March alone. The re-routing helped lift Brazil’s overall exports to a record US$82.3 billion, even as global oil markets tightened and Brent crude traded near US$95 a barrel. The clash in the Middle East has rewired trade flows and sent mixed signals through world markets, where equities have hit fresh highs despite lingering supply risks.

Record exports driven by crude

Brazil’s trade account posted its strongest first quarter on record. The country registered a US$14.2 billion surplus in Q1. Total exports reached US$82.3 billion, also a historical high.

Crude oil was the standout. Oil exports jumped 31% to US$12.56 billion. China absorbed a large share of that rise. It took 57% of Brazilian crude volume in the quarter and 65% in March alone, pushing Brazil’s dollar receipts from crude to US$7.19 billion for the period.

March was unusual. It recorded the highest monthly volume of Brazilian oil shipped to China since 1997, the start of the historical series. India also raised its purchases. Indian imports of Brazilian crude climbed 78% to US$1.03 billion. At the same time, purchases by the United States fell sharply, down about 40% from US$1.065 billion to US$632 million.

Why buyers shifted

The shift followed disruptions tied to the Iran war. Concerns about tanker routes and supply through the Strait of Hormuz pushed many buyers to find alternatives. Asian refiners increased purchases from Atlantic suppliers.

Brazil was a ready source of extra crude.

Those flows mattered fast. Shipments that would normally come from the Middle East were rerouted. The result was a clear, measurable swing in trade patterns in just a few weeks.

Global markets mixed: stocks rise, oil stays high

International markets showed a split reaction. Equity indexes rallied. The S&P 500 closed at fresh highs after an initial wartime drop. U.S. Stocks fell in the early weeks of the conflict but then recovered, erasing the losses and pushing the index to new records.

Economists and traders said investors are pricing what they expect the world to look like months ahead, not the immediate disruption. "The stock market isn't trying to price what's happening today," said Joe Seydl, senior markets economist at J.P. Morgan Private Bank. "The stock market is always trying to price what the world is going to look like six to 12 months from now."

Mastheads

Mark Zandi, chief economist at Moody's, said markets have rallied on the prospect that tensions will ease. That hope has helped stocks despite the war and supply shocks.

Oil prices, however, stayed elevated. Brent crude settled around US$94.93 a barrel in mid-April, well above roughly US$70 before the conflict and below the peaks near US$119 when concerns were at their highest. Traders have reacted to pauses in fighting and to tentative diplomatic moves, but prices remain sensitive to any interruption in Persian Gulf flows.

Domestic reactions in Brazil

The federal government revised its 2026 outlook after the Q1 numbers. Officials lifted the export projection to US$364.2 billion and now see an annual trade surplus of US$72.1 billion. That would exceed 2025’s surplus of US$68.3 billion, if the numbers hold through the year.

Not all economists hailed the gains as stable. Researchers at FGV/IBRE and the Brazilian Foreign Trade Association warned the windfall could be temporary. Lívio Ribeiro, a researcher at FGV/IBRE, and José Augusto de Castro, president of the AEB, said higher import costs and volatile commodity prices could erode the benefit. They also pointed out that the gains are concentrated. The economy’s dependence on a few commodities, oil, soybeans and iron ore, deepened rather than diversified.

Exporters and ports in Brazil were clear winners in Q1. Higher crude volumes meant more freight, more export revenues and stronger foreign-exchange inflows. Chinese refiners also gained access to Atlantic supplies when Middle East cargoes were harder to secure.

Some buyers lost out. U.S. Refineries cut their Brazilian purchases sharply. That reflected both the rebalancing of global crude flows and differing refinery needs. Countries closer to the Persian Gulf also faced tighter access to certain grades of crude, which pushed them to alternative suppliers in the Atlantic basin.

The pattern has policy implications. Short-term gains bolstered public accounts and allowed the government to raise forecasts. But the concentration of exports makes fiscal plans vulnerable to a swift reversal if the Iran war eases and Middle East crude returns to normal routes.

Diplomatic moves shaped market sentiment. The United States and Iran announced a two-week ceasefire in early April. That pause, conditional on the reopening of the Strait of Hormuz, briefly calmed buyers. Regional officials later said there was an "in principle agreement" to extend the ceasefire to allow more diplomacy. Yet the ceasefire looked fragile, and both sides accused each other of breaking terms.

Those diplomatic developments mattered for two reasons. First, they altered traders’ fear of long-term supply disruption. Second, they influenced whether the rerouted Atlantic flows stay in place. If shipping through the Persian Gulf normalises, some of the extra Atlantic demand could fall back.

Corporate profit reports also helped explain why stocks rallied even as oil stayed high. Bank of America told investors it earned US$8.6 billion in the first quarter, beating expectations. Morgan Stanley posted stronger-than-expected results, too. Those profits reinforced the idea that underlying corporate performance remained solid even with the geopolitical shock.

That mix of good earnings and hopes for a diplomatic off-ramp made markets more willing to overlook near-term risks. Still, analysts warned gains could be undone if ceasefire hopes faded or oil supply problems worsened.

For trade-dependent countries like Brazil, the immediate switch of buyers had clear effects on revenues and the balance of payments. The surge in crude receipts helped create room in public finances. It also raised questions in policy circles about how to manage this one-off boost while addressing deeper structural risks in the export mix.

For global markets, the episode shows how quickly supply shocks can reshape trade flows. It also shows how equity markets and commodity markets can move in different directions. Stocks have tended to look ahead to corporate profits, while oil tracks current and near-term supply risk.

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Brazil revised its 2026 export projection to US$364.2 billion and now forecasts an annual trade surplus of US$72.1 billion.

This article was created with AI assistance.