MercoPress. South Atlantic News Agency

Brazilian stocks slip as the US-Iran deal sinks oil prices and hits Petrobras

The shares that lost the most value were those of the private oil firms Prio (-6.9%) and Petroreconcavo (-6.5%), also affected by the fall in crude

São Paulo's stock exchange closed on Monday down 0.42%, dragged by the plunge of the state oil company Petrobras after the international crude price fell, linked to the preliminary agreement between the United States and Iran. The Ibovespa, the benchmark index of Latin America's main exchange, ended the session at 170,415 points.

The announcement of the pact between Washington and Tehran —which, after nearly four months of war, provides for suspending hostilities and reopening the Strait of Hormuz to navigation, through which about a quarter of the world's oil and gas production flows— caused a 4.8% drop in the international price per barrel. That decline hit Petrobras, Brazil's largest company, whose preferred shares, among the most traded of the day, plunged 5.1% and dragged the index down, even though the exchange initially traded in positive territory.

The shares that lost the most value were those of the private oil firms Prio (-6.9%) and Petroreconcavo (-6.5%), also affected by the fall in crude. In the opposite direction, the stocks that gained the most were those of the supermarket chain Pão de Açúcar (+13.5%) and the aircraft manufacturer Embraer (+7%).

In the foreign-exchange market, the real held stable against the dollar, which closed quoted at 5.066 reais for both buying and selling on the Brazilian commercial exchange rate. The financial volume traded in the session exceeded 29.8 billion reais —about $5.86 billion— in around 4.1 million operations.

The relationship between the price of crude and Petrobras's share value is direct: much of the company's revenue depends on the evolution of oil on international markets, so a sharp drop like the one recorded on Monday weighs on its shares. The cheaper crude, however, can ease fuel-import costs and inflationary pressure in net-importing economies.

The agreement that drove the move is, for now, preliminary: it envisages a new ceasefire and the opening of the Strait of Hormuz, and its official signing is scheduled for Friday in Switzerland. The actual reopening of the passage, key for the international trade in oil, gas and fertilizers, will also depend on the removal of the mines laid during the conflict, a factor the market will follow closely in the coming days.