War on Iran Threatens Brazil's Economy

Oil price gains and fertilizer shortages could disrupt Brazil's agribusiness by 2026/27.

Apr. 1, 2026 at 7:44pm

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The ongoing conflict between the U.S., Israel, and Iran has had significant economic implications for Brazil. Surging oil prices and potential fertilizer shortages stemming from the disruption of trade through the Strait of Hormuz are expected to impact Brazil's economy, particularly its vital agricultural sector, by the 2026/27 season.

Why it matters

Brazil's economy is heavily dependent on commodity exports, especially agricultural products. Disruptions to oil and fertilizer supplies could drive up costs for Brazilian farmers, threatening the country's position as a major global food exporter.

The details

The war has led to a spike in global oil prices, which benefits Brazil's oil industry but also increases costs for consumers and businesses. Additionally, Brazil relies heavily on imported fertilizers, much of which comes through the Strait of Hormuz. A blockade of this critical trade route could severely limit fertilizer supplies, hampering Brazil's large-scale agricultural production.

  • The U.S. airstrike that killed top Iranian leaders occurred over a month ago, initiating the current conflict.
  • The economic impacts on Brazil are expected to materialize by the 2026/27 agricultural season.

The players

Otaviano Canuto

A senior fellow at the Policy Center for the New South, professor at George Washington University, principal of the Center for Macroeconomics and Development, and a non-resident senior fellow at Brookings Institution. He is a former vice-president and executive director at the World Bank, IMF, and Inter-American Development Bank, as well as a former deputy minister for international affairs at Brazil's Ministry of Finance.

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What they’re saying

“Iran war and Hormuz blockade hit Brazil: oil gains vs inflation, fertilizer shortages threaten agribusiness by 2026/27.”

— Otaviano Canuto, Senior Fellow

What’s next

Analysts will continue to monitor the ongoing conflict and its potential impacts on Brazil's economy, particularly the agricultural sector, in the coming years.

The takeaway

The war between the U.S., Israel, and Iran poses significant economic risks for Brazil, which relies heavily on commodity exports and imported fertilizers. Policymakers will need to carefully navigate these challenges to protect Brazil's economic interests.