The escalation of tensions and outbreak of war in the Middle East, marked by military actions from the United States and Israel against Iran, have led to increased oil prices and a stronger dollar in Brazil. As of the beginning of the week, oil prices have surged past $82 per barrel, reaching heights not seen since January 2025. This spike is attributed to the closing of the Strait of Hormuz by Iran, which analysts predict will result in further substantial price increases over the coming months, particularly impacting fuel prices in Brazil.

Additionally, the rising dollar poses a risk for inflation in Brazil due to its direct influence on the cost of imported goods and raw materials. The dollar's value increased by 0.6% on Monday, reaching R$ 5.16, and continued to climb on Tuesday, contributing to fears about rising costs. These developments in foreign exchange rates are expected to put pressure on the Brazilian economy, particularly affecting transport and other sectors reliant on imported materials and energy costs.

As the Brazilian government contemplates adjustments to interest rates in response to these economic pressures, the influence of skyrocketing oil prices and a depreciating currency may result in a more cautious approach to monetary policy. The war's direct and indirect effects on inflation and economic stability prompt concerns that Brazil may face limitations in its ability to sustain interest rate cuts as it grapples with external shocks and rising internal costs.