Petrobras, Brazil’s majority-state-controlled oil company, is set to release its second quarter earnings report today. Oil revenues have been heavily
Petrobras, Brazil’s majority-state-controlled oil company, is set to release its second quarter earnings report today.
Oil revenues have been heavily affected by the COVID-19 pandemic, which has strangled offshore supply chains and global petroleum demand. A July 21 Petrobras filing reported a 3.7% drop in barrels of oil equivalent per day from first quarter figures. However, strong demand from China—Petrobras’ largest customer by volume—has managed to soften the blow and maintain the firm’s average production target of 2.7 million barrels per day (BPD) in 2020. The company achieved record exports in April, shipping upwards of 1 million BPD.
Oil represents around 7% of Brazil’s GDP and Petrobras is responsible for more than 90% of Brazilian crude production; any fall or rise in the company’s earnings will affect the country’s post-pandemic economic recovery. Analysts expect Petrobras to report eventual 2020 revenues of $53.37 billion, which would mark a substantial 30% drop compared to 2019 figures.
With Brazil currently in the midst of the world’s second-largest COVID-19 outbreak, the contextual strength of the oil sector has likely muted the country’s economic contraction, with forecasts edging closer to the government’s estimate of -4.7%. Although oil prices have rebounded, a continuing rise in domestic cases, political turmoil and signs of a global resurgence indicate that Brazil’s economic recovery is likely to face medium-term delays.
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