Brazil’s oil exports plunge in May as export tax and domestic use weigh on shipments

Brazil’s oil exports in May are moving at a pace that suggests shipments could fall by half from the previous month, with an export tax limiting volumes and stronger demand for domestic fuel production also weighing on flows, according to government data and industry assessments provided to Reuters.

The export tax was one of the measures adopted by the Brazilian government to address the surge in oil prices caused by the conflict in Iran. Brent crude, which traded at US$72 a barrel before the war, reached nearly US$120 over the past three months.

By keeping more crude in the domestic market and benefiting local refineries, the measure is affecting Brazilian shipments at a time of record oil production in the country. Brazil had been meeting additional demand from countries such as China and India, which were also hit by transport disruptions in the Strait of Hormuz, through which 20% of global oil and gas production passes.

Through the third week of May, Brazil’s average oil shipments fell 52% to 216,700 tonnes per business day, according to data from the Foreign Trade Secretariat, Secex. That pace would put the country on track to close the month with total exports of about 4.5 million tonnes.

That compares with 8.2 million tonnes exported in April and 9.5 million tonnes in May last year, according to Secex data.

One industry source interviewed for the report said buyers are avoiding the 12% export tax, which began being charged in March as part of a package designed to soften the effects of surging international oil prices.

The tax was implemented temporarily as a way to offset, through higher revenue, fuel-related tax exemptions aimed at keeping prices under control. It also seeks to encourage domestic production of oil products.

The surge in oil prices, reflected in Brazil’s export values in May with a 58% increase in the daily average through the third week of the month, was not enough to offset the drop in volume. In dollar terms, Brazilian crude shipments totaled US$152 million per day, down 24%, according to Secex data.

Impact of consumption

Another person with knowledge of operations at Petrobras, Brazil’s main fuel producer, noted that the company’s refinery capacity utilization factor is close to 100%.

As a result, more crude is being processed domestically, reducing the amount available for export.

For StoneX market intelligence analyst Bruno Cordeiro, much of the decline in exports is being driven by higher domestic oil consumption, mainly since March, as Petrobras seeks to ensure the supply of refined products.

“This movement happened mainly through Petrobras refineries. We saw a significant increase in the production of diesel and jet fuel, which are the products in which Brazil has the greatest exposure to foreign markets,” he said, noting that diesel consumption is strong, supported by agribusiness and manufacturing.

Cordeiro also said “producers may be directing a larger share of volumes to the domestic market to avoid the tax.”

“However, I think this movement is more a reflection of efforts by domestic refineries to guarantee supply, which ultimately results in a smaller exportable surplus of crude oil,” he said.

Brazil had been increasing oil exports as production hit records, supported by new platforms operating in pre-salt fields.

Brazil’s oil output reached a record for the second consecutive month in March 2026, at 4.25 million barrels per day, up about 17% from the same month in 2025, according to data from oil regulator ANP.

Brazilian oil exports reached the second-highest volume on record in March this year, at 10.1 million tonnes, behind only March 2023, according to Secex data, before the impact of the government measures was felt.

The projected decline in shipments for May comes after a court suspended an injunction obtained by oil companies Shell, TotalEnergies, Equinor, Petrogal and Repsol Sinopec that had exempted them from the export tax.

Petrobras did not challenge the export tax in court. Its chief executive, Magda Chambriard, has said higher oil prices help mitigate the impact of the tax.

Source: Folha de São Paulo

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