Brazil plans slower phase-out of 1.12 real-per-liter diesel subsidy as 0.44 real gasoline support ends within days
AI Market Summary
Brazil plans a slower phase-out of its diesel subsidy than gasoline to avoid price shocks and supply disruptions, despite Brent's retreat from war highs. The policy signals near-term cushioning of domestic diesel demand and inflation pass-through, while discussion of reducing or ending a 12% crude export tax could alter export incentives and regional crude flows. Fiscal-neutral framing and potential spending freezes temper broader macro implications.
Impact level
● Medium
Affected assets
NCCO1OILBRENT2USD/USDT+0.56%
AI Insight · NCCO1OILBRENT2USD/USDTAI Insight
● Neutral
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Brazil’s planning and budget minister said the government will take longer to phase out the 1.12 real-per-liter diesel subsidy than the gasoline benefit to avoid price shocks and fuel shortages. The 0.44 real-per-liter gasoline subsidy is set to be removed within days. The plan comes as Brent crude has fallen from a wartime peak of $118 a barrel to $71.51, though the decline has not been fully passed on to consumers. The government is also weighing whether to cut or end the 12% crude oil export tax introduced in March.
