Brazil’s shift towards electric mobility poses challenges for fossil fuel usage, but the energy sector is banking on the strength of biofuels to maintain balance.
The rise of electrified vehicles in the national fleet is ushering the petroleum derivatives market into a new phase of adjustments. During ROG.e 2026, Gabriel Barra, Director of Oil and Gas for Citi Latam, noted that while Brazil is moving towards decarbonization, a viable coexistence between different energy sources exists in the long term.
Although Brazil reports a 20% penetration of electrified cars in new model sales, the impact on fuel consumption varies by application. The executive emphasizes that the ride-sharing and taxi fleet sector — which accounts for a significantly higher mileage volume — dictates the real pace of this change.
The Strategic Role of Ethanol and Energy Security
For Citi, the reliance on ethanol will remain central, especially given that Brazil’s refining park already operates near its capacity limit for gasoline production. Without this renewable fuel, the trade balance would be drastically pressured by the need for increased imports.
There will be room for both. Ethanol production is widespread in Brazil, and I don’t see the country without it in the future.
In addition to ethanol, the analyst highlighted biodiesel and corn ethanol as vital elements for national supply security. The use of these sources in a predominantly flex-fuel fleet ensures not only a smaller carbon footprint but also necessary protection against international price instability.
Geopolitics and Market Challenges
In the macroeconomic scenario, the oil market exhibits peculiar behavior. Despite intense tensions in critical regions like the Strait of Hormuz, WTI prices have not experienced soaring spikes. Nevertheless, Brazil’s dependence on diesel imports — approximately 30% of domestic demand — keeps the country on constant alert.
The bank projects US$ 65 per barrel for the next year, based on the assumption of global flow normalization. However, the scenario is monitored cautiously due to unpredictable variables, such as escalating conflicts in Ukraine and climatic fluctuations caused by El Niño.
Investments and Regulatory Uncertainties
A point of concern raised by the executive is the legal certainty for new projects. The maintenance of a 12% export tax on oil companies’ revenue is seen as an obstacle. According to Gabriel Barra, sudden changes in fiscal rules inhibit capital flow for exploration and production.
The strategy for the next decade involves a joint effort between major and independent companies. With national production reaching an expected growth level by 2030, the focus must remain on exploring new frontiers and recovering mature fields to ensure the sector continues to be a robust engine for the Brazilian economy.
