Brazil’s oil export tax, rising commodity revenues, trade dependence on China, and fiscal rules shape the country’s economic outlook and 2027 budget.
Brazil's 12 percent tax on crude oil exports is formally due to expire on November 6, just two days after the Monetary Policy Committee (Copom; Comitê de Política Monetária) of the Banco Central do Brasil (BCB) announces its November rate decision and two months before Luiz Inácio Lula da Silva is sworn in for a fourth term on January 5, 2027, the first inauguration on that date under Constitutional Amendment 111 of 2021. The resolution that extended the levy, issued by the Executive Management Committee (Gecex; Comitê-Executivo de Gestão) of the Foreign Trade Chamber (Camex; Câmara de Comércio Exterior), granted a further 60 days from September 8 and said nothing about what comes next. Whether to renew or drop it is therefore the first fiscal choice of a term that has not yet begun, and the decision falls to a government whose next finance minister has yet to be named. The tax sits at the intersection of the oil windfall of 2026 and the fiscal framework that Lula's own government introduced in 2023. The evidence below suggests that Brazil's commodity boom is narrower than its headline price index implies and that the fiscal rule, while keeping the windfall off the spending ceiling as designed, has not stopped the money from flowing back out of the treasury through carve-outs that the rule itself permits.
The urgency of that decision owes much to the way the election ended and the way markets received it. The Superior Electoral Court (TSE; Tribunal Superior Eleitoral) declared Lula re-elected with 64,256,232 votes, or 51.79 percent of valid votes, against 59,826,041, or 48.21 percent, for Flávio Bolsonaro of the Liberal Party (PL; Partido Liberal). According to the Chamber of Deputies' news service, it was the first time in the runoff era that a candidate who finished second in the first round went on to win the second; Flávio Bolsonaro had led round one with 47.03 percent to Lula's 45.16 percent. On Monday, October 26, the first session after the vote, the Ibovespa stock index closed at 176,608.23 points, down 13.88 percent from 205,082.56 on Friday, October 23, according to the daily closing file published by the exchange operator B3. Over the same two sessions the central bank's PTAX reference rate rose from R$5.0377 to R$5.5007 per US dollar, a 9.2 percent jump in the official fixing. Flávio Bolsonaro dropped a call for annulment and said he would instead ask the TSE to strip the Lula and Geraldo Alckmin ticket of its mandate for alleged abuse of power, without presenting evidence, while the PL's president, Valdemar Costa Neto, said on October 27 that the party recognized the result. For Graham Stock of RBC BlueBay, the key signal for markets would be the next administration's "commitment to fiscal discipline, starting with the appointment of a new finance minister in coming weeks."
Judging that commitment starts with establishing what, exactly, boomed, because commodity revenue has carried part of Brazil's fiscal effort this year. The central bank's commodity index for Brazil, the Índice de Commodities–Brasil (IC-Br), measured in dollars, reached an all-time high of 207.70 in May 2026 (December 2005 equals 100) and stood at 205.70 in September, 12.8 percent above a year earlier. The energy sub-index jumped from 75.66 in February to 94.07 in March, a rise of about 24 percent in one month, as the Middle East conflict drove fuel prices higher. The metals sub-index set its own record of 350.89 in May, but that basket is broader than iron ore, and Brazil's iron ore export earnings actually fell 2.2 percent in the first nine months of the year. The agriculture sub-index averaged 1.2 percent lower from January to September than in the same months of 2025. Chart 1 sets the composite against its components since 2019.
A record export-price index would normally signal a national windfall, but Brazil's import bill rose almost in step with its export receipts. The terms-of-trade series of the Ministry of Development, Industry, Trade and Services (MDIC; Ministério do Desenvolvimento, Indústria, Comércio e Serviços) shows export prices averaging 6.9 percent higher in January to September 2026 than a year earlier, while import prices rose 7.5 percent. The ratio of the two, the terms of trade, averaged 127.2 over those months, 0.5 percent lower than in 2025 and well short of its record of 139.49 in September 2011. The energy shock that lifts the price of Brazilian crude also lifts the price of the fuel Brazil buys abroad, and the Finance Ministry has noted that more than 25 percent of the diesel the country consumes is imported. Chart 2 shows how far 2026 sits from the supercycle peak.
If the country as a whole gained nothing on its terms of trade, the gain must sit somewhere specific, and customs data locate it. Calculations from the MDIC's Comex Stat raw export files show that crude oil overtook soybeans as Brazil's largest single export in January to September 2026, at 15.11 percent of the total against 15.07 percent. Soybeans, iron ore and crude together made up 37.3 percent of exports, against 13.6 percent in 2003. China bought 29.8 percent of everything Brazil sold, and it took 69.9 percent of the soybeans, 68.5 percent of the iron ore and 50.7 percent of the crude, the last up from 43.9 percent a year earlier. The United States moved the other way. Its share fell to 9.65 percent, and shipments to it dropped 6.5 percent while total exports rose 10.4 percent. A ministry note updated on October 26 finds that two US Section 301 tariffs, of 25 percent and 12.5 percent, now stack to 37.5 percent on 16.5 percent of Brazil's exports to the United States, while 52.7 percent still enter without any surcharge. Chart 3 traces the long tilt. A Herfindahl–Hirschman index (HHI) of product concentration, computed from the same files, rose from 172 in 2003 to 600 in 2026 on a 10,000-point scale, below the 1,500 that antitrust practice calls concentrated, so the index understates a dependence that sits in three product lines and one buyer.
Concentration shows where the money comes from, while the split between price and volume shows how long it is likely to last. Table 1 compares the main export lines in the first nine months of 2025 and 2026.
Table 1: Brazil's main exports, January to September, US$ billion
| Product | 2025 | 2026 | Value change | Volume change | China's share of value, 2026 |
|---|---|---|---|---|---|
| Crude oil | 33.44 | 43.01 | +28.6% | +10.1% | 50.7% |
| Soybeans | 37.33 | 42.90 | +14.9% | +6.7% | 69.9% |
| Iron ore | 20.58 | 20.13 | −2.2% | −1.3% | 68.5% |
| Frozen beef | 9.90 | 11.09 | +12.0% | −2.8% | 49.7% |
| Refined oil products | 7.94 | 10.53 | +32.6% | +0.4% | 2.1% |
| Coffee | 10.35 | 9.21 | −11.0% | −5.4% | 1.3% |
| Sugar | 10.14 | 7.37 | −27.3% | −11.9% | 9.3% |
| All goods | 257.89 | 284.65 | +10.4% | n/a | 29.8% |
Crude's 28.6 percent gain in value breaks down into a volume gain and an implied rise in the price per tonne, because value growth compounds the two:
Roughly three-fifths of the crude gain, in other words, came from price, and price is the part that reverses when Brent falls. The volume part is sturdier. The National Agency of Petroleum, Natural Gas and Biofuels (ANP; Agência Nacional do Petróleo, Gás Natural e Biocombustíveis) reports pre-salt output of 3.842 million barrels a day in August 2026, up 22.90 percent from a year earlier, within total oil and condensate production of 4.615 million barrels a day.
Price and volume rising together explain why the windfall shows up so plainly in the public accounts. A Chamber of Deputies budget consultancy note on preliminary Treasury data puts central-government revenue from the exploration of natural resources at R$125.8 billion (about US$24.5 billion at the central bank's September 2026 average PTAX rate of R$5.14 per dollar, used for every conversion in this article) in January to September 2026, 23.3 percent more in real terms than a year earlier. The ANP records royalties of R$57.9 billion over the same months, up 22.92 percent, and special participation of R$27.9 billion, up 9.13 percent. Dividends and participations ran against the boom, falling 43.1 percent in real terms. Table 2 sets out the rent lines.
Table 2: Commodity rents in the central-government accounts, January to September, R$ billion at 2026 prices
| Item | 2025 | 2026 | Real change | 2026, US$ billion |
|---|---|---|---|---|
| Revenue from exploration of natural resources | 102.0 | 125.8 | +23.3% | 24.5 |
| Transfers of that revenue to states and municipalities | 55.2 | 61.3 | +11.2% | 11.9 |
| Retained by the federal government (calculation) | 46.8 | 64.5 | +37.8% | 12.5 |
| Dividends and participations | 36.8 | 21.0 | −43.1% | 4.1 |
| Central-government primary result | −110.7 | −92.6 | n/a | −18.0 |
Source: Chamber of Deputies, Consultoria de Orçamento, Informativo ST 15363/2026, on preliminary Treasury data, October 2026; retained figure calculated by IndraStra Global as revenue minus transfers.
A spending rule that tracked total revenue would turn such rents straight into outlays, and Complementary Law 200 of 2023 was written to prevent exactly that. Article 5 of the law lets real spending limits grow by 70 percent of real revenue growth, or 50 percent if the previous year's primary target was missed, within a floor of 0.6 percent and a ceiling of 2.5 percent. Its second paragraph strips out of that revenue base concessions and permits, dividends and participations, revenue from the exploration of natural resources, and revenue-sharing transfers, among other items. The rule can be written in one line:
Here g*revenue is real growth in primary revenue after the exclusions. If adjusted revenue grows 2 percent, the limit grows 1.4 percent; a rise in royalties, however large, changes g* by zero. Rents still count in full toward the primary result, which is what the annual target tests, and Article 9 lets up to 70 percent of any result above the band's upper bound go to investment, capped at 0.25 percent of the previous year's gross domestic product (GDP). The export tax is a different instrument. It is a tax, not a royalty or participation, and nothing in the second paragraph excludes it, so on this article's reading of the law, which no official or expert source consulted has confirmed, its receipts would enter the base that sets future spending limits.
The wall around the spending ceiling holds, yet the 2026 budget shows oil money and its costs passing around it by other routes. A Senate budget consultancy note on the government's fourth bimonthly evaluation report, dated September 25, projects a 2026 primary deficit of R$80.9 billion (about US$15.7 billion). Legal deductions of R$67.3 billion reduce what counts against the target: R$54.7 billion of court-ordered payments (precatórios), R$5.0 billion of strategic defense spending, R$6.6 billion of temporary health spending financed by the pre-salt Social Fund and R$1.0 billion of pension refunds ordered under a Supreme Federal Court (STF) case. The remainder, a deficit of R$13.6 billion against a floor of zero, forced the year's first spending contingency of R$13.6 billion, or R$16.1 billion with an additional block. On the revenue side the same note re-estimates the crude export tax at R$22.0 billion (about US$4.3 billion) for 2026 and records that it compensates for R$2.1 billion of fuel-tax relief under Complementary Law 235 of 2026. On the spending side, new extraordinary credits of R$20.1 billion, which sit outside the ceiling, include the gasoline subsidy. The Finance Ministry's September 9 package cut federal taxes on gasoline by R$0.63 a liter (about US$0.12) and authorized a diesel subsidy of R$1.00 (about US$0.19) a liter. The Senate consultants read the revenue revision as a sign of "menor desempenho da base tributária e maior dependência de receitas extraordinárias do setor de petróleo," a weaker tax base and greater dependence on extraordinary oil revenue. Chart 4 shows how much of the remaining gap the export tax covers.
Without the export tax, and with nothing else changed, the gap to the floor would be -13.6 -22.0 = -35.6 billion reais (about US$6.9 billion), more than two and a half times the contingency already imposed.
The government has defended this arrangement, and its case deserves a hearing before any judgment on the rent. Planning Minister Bruno Moretti said on October 9 that the export tax is regulatory and temporary, to be kept while Brent stays above US$100 a barrel, and that its revenue was not counted as a source of funding for fuel relief. "O imposto de exportação não serve para o propósito de custear," he said, meaning that the export tax does not exist to pay for things. On this view the tax tilts crude toward domestic refining while the subsidies cushion consumers, and both should end with the shock, as counter-cyclical policy is meant to. The ceiling, meanwhile, has not moved by a single real because of royalties. The budget documents, however, point elsewhere. The Senate note books the tax as revenue that offsets a tax cut, and Chart 4 shows the R$22.0 billion doing real work against the floor. A tax designed to disappear when Brent falls would vanish just as royalties fall too, so the design that makes it temporary also ties the fiscal position to the oil price. The courts add uncertainty. A federal judge suspended the tax in August at the request of oil producers, on the ground that a resolution could not revive a levy created by a provisional measure that had lapsed, before an appeals court overturned the injunction.
That leaves the fourth term facing a choice that the framework does not make for it. The Planning Ministry's 2027 budget guidelines bill sets a primary surplus target of R$73.2 billion (about US$14.2 billion), or 0.50 percent of GDP, for 2027, rising to 1.50 percent in 2030. Because the central government ran a deficit in 2025, the guidelines also confirm that the Article 6-A triggers apply in 2027, banning new tax benefits and holding real payroll growth to 0.6 percent. One path is to bank the rent, keeping the export tax or legislating a replacement, letting fuel subsidies lapse as Brent eases and counting royalties above the budget assumption toward the 2027 target. The other is to keep spending the rent at the pump, defensible in a war shock but leaving the target resting on deductions and on Brent. The September evaluation already raised its oil-price assumption to US$87.70 a barrel from US$79.16, so the projections lean on prices well above what the government expected at midyear. Interest-rate futures moved above 15 percent on October 26, the day Lula met his finance and planning ministers after the sell-off.
The coming weeks will reveal how the new term intends to use the rent, through a sequence of dated decisions. The Copom is scheduled to announce its rate decision on November 4 at 6:30 PM Brasília time, according to the BCB's published calendar. Two days later, on November 6, the export tax reaches the end of its current term unless Gecex, which first set the 12 percent rate on July 9, acts again. The evidence points to a country whose terms of trade have barely improved, while its export gains are increasingly concentrated in a single commodity sold heavily to a single buyer. Its treasury now leans on that product through a temporary tax and a set of deductions. The fiscal rule keeps the rent off the spending ceiling, which is what it was built to do. Whether the rent ends up strengthening the 2027 target or paying for fuel relief is a political decision for the new term, and the first signal of which way it goes arrives on November 6.
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