Brazil's Ministry of Finance has extended the country's diesel subsidy for another 30 days. The benefit of R$ 2.12 per liter, which keeps pump prices lower, takes effect on Sunday (27), one day after the provisional decree issued in May that backed part of the value expires. The decision is in a ministerial order signed by Finance Minister Dario Durigan.

The document justifies the renewal on the volatility of international oil and fuel prices. On Friday (25), state news agency Agência Brasil had already reported that the ministry was preparing a 30-day extension.

How the subsidy works

The subsidy has two parts, according to news site G1. One, worth R$ 1.12, was created by a provisional decree in May. A provisional decree, or "medida provisória", is an emergency measure with the force of law that expires unless Congress approves it. The other part, R$ 1, was added in September as the external outlook worsened.

Because the May decree lapses on Saturday (26), the ministry changed the rule so the full R$ 2.12 rests only on the September decree from Sunday on. The government says the change does not increase the subsidy: the goal is to prevent the benefit from falling to R$ 1 per liter.

Oil prices and the election calendar

Brent crude, the global benchmark, has again topped US$ 100 a barrel after the conflicts in the Middle East worsened. More than 25% of the diesel consumed in Brazil is imported. According to G1, the government's measures to contain fuel prices, including a gasoline subsidy announced early this month, came less than a month before the presidential election and amid rising oil prices.

The 30-day window runs to late October, so the subsidy will remain in place on election day. The September decree, which now carries the full R$ 2.12, is still before Congress; if lawmakers do not approve it, it can expire, as the May decree is doing now. Once the new deadline passes, the ministry must decide whether to extend the subsidy again.