FINWIRES · TerminalLIVE
FINWIRES

Update: Brazil Approves Subsidies for Gasoline, Diesel

By

(Updates with additional details from Brazilian government statement.)

The Brazilian government on Wednesday said it will subsidize gasoline and diesel through a Provisional Measure to mitigate the inflationary impact of the Middle East conflict.

"The objective is to cushion the rise in fuel prices caused by the prolonged war in the Middle East," according to a statement by the Ministry of Planning and Budget.

The Ministry of Finance will publish a decree over the next few days establishing the subsidized amounts.

The subsidy will be paid directly to gasoline producers and importers through the National Agency of Petroleum, Natural Gas and Biofuels, or the ANP, according to the statement.

Brazil's Minister of Mines and Energy Alexandre Silveira, the Minister of Planning and Budget Bruno Moretti, and the Executive Secretary of the Ministry of Finance, Rogerio Ceron, jointly made the announcement during a press conference on Wednesday.

The Provisional Measure establishes that the subsidy cannot exceed the ceiling of federal taxes levied on fuels, the statement said.

Gasoline is currently taxed at 0.89 Brazilian reais ($0.17) per liter, inclusive of federal fuel taxes, while diesel is taxed at 0.35 Brazilian reais per liter, which was suspended in March.

The new subsidy will start with gasoline, which has not received any subsidy or tax cut since the war began. "But it could be extended to diesel when the subsidy established by Provisional Measure No. 1,340, with a planned duration for the months of April and May, ceases to be applied," according to the statement.

The new subsidy is part of Brazil's broader effort to curb fuel price increases linked to the Middle East conflict.

The government has already announced subsidies of 1.52 Brazilian reais per liter for imported diesel and 1.12 Brazilian reais per liter for domestically produced diesel.

According to a Bloomberg report, citing Planning Minister Bruno Moretti, the government intends to spend up to 2.9 billion reais per month to subsidize both domestically produced and imported gasoline and diesel.

The program was introduced on Wednesday through a directive issued by President Luiz Inacio Lula da Silva, who is likely to seek re-election later this year. It will run for two months and will be extended if required, the report added.

The subsidy is expected to be extended to diesel from June onwards following the expiry of an existing one at the end of May, Reuters reported.

The directive was issued after a proposal to slash federal fuel taxes stalled in Congress, according to Reuters.

The move is expected to allow Petrobras (PBR) to increase prices. The state-controlled energy major has delayed price revisions to shield domestic consumers from international oil price volatility, a separate Bloomberg report said.

Price: $19.97, Change: $+0.38, Percent Change: +1.94%

Related Articles

Oil & Energy

Spain Aviation, Energy Groups Push Madrid to Back European e-SAF Auction

Over 21 Spanish aviation and energy groups urged Madrid to commit financial support for a European e-Sustainable Aviation Fuel auction before the June EU Transport Council, Transport & Environment said in a Tuesday statement.The coalition issued a joint letter to the Spanish government urging direct financial support for synthetic SAF, also known as e-SAF.Apart from T&E Spain, which coordinated the effort, the coalition includes airlines, aircraft manufacturers, renewable power companies, and industrial developers in support of public funding for e-SAF projects.The signatories, including Airbus, Moeve, AELEC, RIC Energy and the Spanish Airlines Association, proposed a pilot auction backed by a public intermediary under a structure similar to H2 Global.T&E said Europe imports about 95% of its crude oil, while nearly 30% of jet fuel supplies rely on shipping routes through the Strait of Hormuz.The coalition said disruptions linked to the Iran crisis more than doubled benchmark jet fuel prices and pushed Lufthansa to cancel 20,000 flights through the autumn period.International Energy Agency Executive Director Fatih Birol warned Europe may hold only about six weeks of jet fuel reserves after the recent supply disruptions.T&E estimated geopolitical oil costs added 29 euros ($33.96) per passenger on intra-European flights, compared with just 0.70 euros tied to ReFuelEU compliance requirements.The gap widened on long-haul flights, where fossil fuel exposure lifted costs by 88 euros per passenger while ReFuelEU rules added only about 3 euros, according to T&E.T&E Spain Deputy Director Ioan Bucuras said aviation faces greater risks from oil dependence than from climate regulation."Every euro invested in e-SAF today is an insurance policy against future energy shocks, and a bet on European industrial sovereignty," he said.The coalition identified uncertainty over long-term revenues, technology risks and short-term offtake agreements as the main barriers preventing investment in industrial-scale e-SAF facilities.The groups proposed a two-sided auction system that would guarantee long-term revenues for producers while securing competitively priced fuel supplies for airlines.Germany has already pledged up to 2 billion euros for an e-SAF auction planned by early 2027, while Luxembourg and Portugal are also weighing participation, according to T&E.The coalition urged Spain to join the European Commission taskforce shaping the joint e-SAF pilot auction and ensure the framework supports Spanish projects and domestic fuel buyers.The signatories also asked Madrid to commit funding before the June 26 EU Transport Council by using the Recovery and Resilience Facility and Emissions Trading System revenue, while improving interministerial coordination and stabilizing electricity costs for industry.

Oil & Energy

US Oil Update: Crude Drops Amid US-Iran Impasse, Market Eyes Trump-Xi Meeting

Crude oil futures retreated in after-hours trading on Wednesday, paring earlier gains, as markets assess a prolonged standoff between the US and Iran, with focus now shifting toward a high-stakes meeting between President Trump and Chinese President Xi Jinping.Front-month West Texas Intermediate crude futures dropped by 1.15% to $101 per barrel, while Brent futures fell by 1.92% to $105.70/bbl.US crude inventories fell by 4.3 million barrels to 452.9 mmbbls in the week ended May 8, the Energy Information Administration said in its weekly report on Wednesday. The agency said the stockpiles are now about 0.3% above the five-year average for this time of year.Trump arrived in China on Wednesday after downplaying the attention the ongoing conflict would receive during his summit with President Xi, saying that "we have Iran very much under control," according to media reports.The US President reportedly plans to prioritize trade negotiations during the meeting with the two leaders. China is reportedly the biggest buyer of Iranian oil despite sanctions pressure from the Trump administration.However, despite the retreat on Wednesday, the broader outlook remained bullish. The International Energy Agency said on Wednesday that global observed oil inventories dropped by 250 million barrels in March and April, or at a rate of about 4 million barrels per day."With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the IEA said in its Oil Market Report.The agency projected that the market will remain "severely undersupplied" until October, even if the Middle East conflict ends next month.OPEC on Wednesday said that crude production among member states fell further in April and is down more than 30% since the onset of the conflict in late February.The group's production fell by 1.7 million b/d in April after output plunged by 7.9 million b/d in March. Production among OPEC countries dropped by more than 30%, or 9.7 million b/d, during the conflict.Meanwhile, the effective closure of the Hormuz has significantly disrupted global supplies of crude, natural gas and fuels, stoking fears of reignited inflation.Vietnam's state oil firm reportedly urged the US to let a supertanker laden with crude pass through its naval blockade outside the Persian Gulf, saying the shipment is vital to its economy. The vessel crossed Hormuz but reversed course on Monday near the US blockade.The US Central Command said on Wednesday it has redirected 67 commercial vessels as part of a blockade targeting ships entering and exiting Iranian ports.

Oil & Energy

Enverus Intelligence Research Reaffirms Higher-for-Longer Oil Price Outlook Through 2027

Enverus Intelligence Research reaffirmed its higher-for-longer oil price outlook, maintaining forecasts for Brent crude to average $95 per barrel for the remainder of 2026, the firm said in a Tuesday statement.Enverus maintained $100/bbl through 2027 amid ongoing geopolitical tensions that continue to disrupt global supply flows.The research firm said market pricing and peer forecasts are increasingly converging with its projections, which it first outlined on March 11.The outlook is anchored by the ongoing closure of the Strait of Hormuz, a key global oil transit chokepoint, and by declining crude and refined product inventories in advanced countries of the Organization for Economic Co-operation and Development.EIR said its base-case scenario assumes the Strait of Hormuz remains closed for three months. The firm added that each additional month of disruption could increase its oil price outlook by another $10 to $15 per barrel.The report also cited constrained global spare production capacity and a muted US shale supply response as structural factors likely to sustain elevated geopolitical risk premiums in oil markets."Since March 11, our view has been that oil prices would remain higher for longer, and we have not deviated from that position as events have unfolded," Al Salazar, director of research at EIR said."However, our three-month base case closure presumption is about to come due, and the lack of resolution introduces additional uncertainty around the path forward," Salazar said.EIR said prolonged disruption in the Middle East could further tighten global crude supplies, particularly as inventories remain below historical norms.EIR said the combination of supply constraints, geopolitical instability and limited production flexibility among major producers continues to support a structurally higher oil price environment into 2027.