Importação de diesel
Trade Regulations

Russian ban on diesel exports drives carriers worried in Brazil

Sep, 29, 2023 Posted by Gabriel Malheiros

Week 202339

The decision of the Russian government to suspend diesel exports is causing concern in the Brazilian port sector, as diesel is crucial for the national logistics chain. The move was made by the Russians last week in an attempt to stabilize prices in the domestic market, which is expected to lead to lower costs for the Russian population. The decision was updated three days ago, allowing the sale of low-quality Russian diesel abroad while still prohibiting the export of high-grade diesel.

Currently, Russia is Brazil’s largest supplier of diesel, accounting for 78% of the fuel imported into the Brazilian market since March, according to S&P Global consulting.

“This is concerning for the sector because, with reduced supply, prices are likely to increase, and, more critically, there may be a shortage of the product,” said André Luís Neiva, President of the Union of Commercial Cargo Transportation Companies of the São Paulo Coast (Sindisan). This warning, Neiva revealed, was raised at the last meeting of the Federation of Cargo Transport Companies of the State of São Paulo (Fetcesp), held on the 21st in the city of São Paulo.

“Businesses involved in the transportation of liquid bulk cargo have raised the imminent risk of a diesel shortage. With this scenario, in addition to increased transportation costs, there is a possibility of product shortages in the market,” Neiva added.

Luciano Carvalho, President of the Union of Independent Road Freight Transporters of the Baixada Santista and Vale do Ribeira (Sindicam), shared a similar perspective. “We’ll have to pass on the price increase. It will be tough for the end consumer as things will become more expensive,” he stated.

Impacts

Port consultant Ivam Jardim pointed out that Brazilian importers have been benefiting from the reduced prices offered by Russian exporters for diesel. According to Jardim, this was a necessary strategy for Russian exporters to find buyers after sanctions were imposed by the European Union, the United States, and other countries and blocs.

“With the suspension of exports and the inability to make purchases, Brazilian importers will have to return to their traditional suppliers, such as the Gulf of Mexico (USA), where prices are higher, or request more volume from Petrobras, which will result in international market prices. However, other countries will also turn to these same suppliers, increasing demand and, consequently, prices. This migration may take time, which raises concerns about possible shortages,” Jardim explained.

The consultant goes beyond the impact on road transportation and provides a broader analysis of the difficulties that may arise due to Russia’s decision.

“This would directly affect transportation costs, including maritime transport of goods to Brazil since diesel is a significant energy source for ships. Additionally, our road transportation system would be impacted, necessitating an increase in freight rates by truck drivers. When these price increases are passed on, it affects the competitiveness of Brazilian products in the international market.”

Source: A Tribuna

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