Even as international oil companies are enjoying the record prices, the stock of Brazil’s state-controlled Petrobras has become much costlier than a Shell or an Exxon. With one of the biggest oil finds in 30 years in Brazil and speculation about an even larger one, Petrobras is now very attractive—thanks to expectations that President Lula da Silva will favour it in exploiting the country’s oil assets, given the resurgence of resource nationalism in recent years. How will all this affect oil cartel Opec and an import-dependent India?
It will take a decade for Brazil to become a player capable of moving the oil market significantly. And though Opec is now running at near full capacity, its market power is unlikely to wane. It may even come up with fresh finds by then. Against this backdrop, India will do well to sustain its efforts to expand economic ties with Latin America. It has recently struck oil deals with Venezuela—already a known resource-rich nation there, and has also signed a pact for cooperation with Brazil.