Russia dominates diesel sales to Brazil amid Iran war

Brazil has sharply increased diesel purchases from Russia since the start of the war in the Middle East, following the suspension of imports from the region. Data from Comex Stat, the foreign trade database of the Ministry of Development, Industry, Trade and Services (MDIC), show that Russia and the United States have become Brazil’s leading diesel suppliers in recent months.

In March and April, Brazil imported US$1.76 billion worth of diesel. Of that total, US$1.43 billion came from Russia, equivalent to 81.25% of the country’s diesel imports. The United States ranked second, with US$112.92 million, or 6.42% of the total.

In April alone, Brazil’s dependence on Russian diesel increased even further. The country bought US$924 million worth of diesel from Russia, accounting for 89.84% of imports that month. The United States supplied 10.98% of purchases, while the United Kingdom had only a residual share.

Key figures

• US$1.76 billion in diesel imports in March and April
• 81.25% of the total came from Russia
• US$924 million imported from Russia in April alone
• Russia accounted for 89.84% of April purchases

Before the conflict, Brazil still sourced part of its imports from the Middle East. In March, the country received cargoes shipped before the war intensified, including purchases from the United Arab Emirates and Saudi Arabia.

The figures show a rapid increase in Russian sales. In February, Brazil imported US$433.22 million worth of diesel from Russia. The amount rose to US$505.86 million in March and approached US$1 billion in April.

Measures

To contain the impact of higher diesel prices on consumers and truckers, the federal government announced a series of compensation measures.

In March, a provisional measure released R$10 billion in subsidies for diesel imports and sales. At the same time, a decree signed by President Luiz Inácio Lula da Silva zeroed out PIS and Cofins federal taxes on diesel.

According to the government, the tax relief should reduce diesel prices by R$0.32 per liter at refineries. An additional subsidy for producers and importers could lead to another reduction of R$0.32 per liter.

The economic team says the revenue loss was offset by higher oil royalty revenues, driven by the rise in international crude prices.

ICMS cut

In April, the federal government launched a program to encourage states to reduce the ICMS tax on imported diesel. The cost of the measure is shared by the federal government and state administrations.

The estimated reduction is R$1.20 per liter at the pump, with a total cost of R$4 billion over two months. Only Rondônia did not join the agreement.

The government also announced an additional subsidy of R$0.80 per liter for diesel produced in Brazil, with an estimated impact of R$3 billion per month.

Companies receiving the benefit will have to prove that the price reduction was passed on to final consumers.

Source: Agência Brasil

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