R$ 2.12 per liter. That is the discount Brazil's Treasury will keep paying on every liter of diesel sold in the country for another 30 days, the Planning Ministry announced on Tuesday (27), according to G1. For a trucker filling a 600-liter tank, the benefit is worth R$ 1,272 per fill-up. Without the extension, the discount would have expired this week, and pump prices could have risen, pushing up the freight costs that carry food to consumers' tables.
The benefit expired on Monday (26), one day after President Luiz Inácio Lula da Silva won reelection, Folha de S.Paulo reported. The decree formalizing the extension will be published later on Tuesday in the Diário Oficial da União, Brazil's federal gazette. The government says it is keeping the subsidy because of volatility in international oil and fuel prices.
The current subsidy adds up two installments. The first, worth R$ 1.12, was created by an executive decree in May (a medida provisória, a presidential order with the force of law that Congress must later confirm). The second, worth R$ 1, was added in September as the external outlook worsened. The government says the extension does not increase the subsidy: the goal is to keep the value from falling back to R$ 1 per liter once the first decree lapses.
How it works. A subvenção is a direct subsidy: instead of letting diesel prices follow the market, the government pays part of the bill so distributors and gas stations charge less at the pump. The benefit was created to shield fuel from the effects of the war in Iran, according to Folha. Because more than 25% of the diesel consumed in Brazil is imported, according to G1, domestic prices depend on oil abroad.
The cost to the Treasury
And abroad the picture remains tense. Brent crude, the global benchmark, traded around US$ 110 a barrel (about R$ 600) on Monday, pressured by clashes between Houthi rebels and Saudi forces, Folha reported. G1 notes that Brent has held above US$ 100 because of conflicts in the Middle East.
The bill is not small. The government has kept fuel subsidies in place since April, at a cost that had already passed R$ 32 billion by the end of August, according to Folha. Even so, the subsidy now covers roughly half the cost of importing diesel, which brokerage StoneX estimated at R$ 6.76 per liter on Friday (23), and it does not cover the gap of up to R$ 3.53 per liter in Petrobras' prices.
The next decision already has a date. On November 6 the additional subsidy of R$ 1.40 per liter on imported diesel expires, and it too can be renewed. Analysts at Goldman Sachs expect international diesel prices to stay under pressure in 2027, even as oil flows resume, because of refinery damage and falling global stocks.
"Stocks [of refined products] remain low in the main hubs, which leaves little room to absorb new supply disruptions," the bank's analysts wrote in a report.