Rising oil prices pressure the government to maintain diesel subsidies

The recent rise in oil prices amid the fighting in Saudi Arabia puts pressure on the government to renew the R$2.12 per liter subsidy for diesel that expires this Monday (26), the day after the second round of the presidential election.

Currently, the total value of the subsidies, R$3.52 per liter, does not cover even half the price of imported diesel, R$6.76 per liter, according to an estimate from consultancy Stone X. The R$2.12 subsidy can be extended for another 30 days, but the decision has not yet been announced by the government.

International oil prices have been on an upward trend since last week, when attacks by the Houthis, a group in Yemen allied with Iran, intensified on strategic points in Saudi Arabia, including refineries and airports. On Friday (23), the commodity closed at US$116.93, the highest value since April.

At the opening of the market on Friday, the price of diesel sold at Petrobras refineries was R$3.53 per liter below the import parity calculated by the Stone X consultancy. On the market average, the difference was R$3.29 per liter.

In the case of gasoline, the gap is smaller, at R$0.58 per liter at Petrobras refineries and R$0.42 per liter at the national average, which includes prices charged by refineries and private importers.

Maintaining fuel prices with high lags could lead the state-owned company to fail to comply with its pricing policy in 2026, in the opinion of Itaú BBA analysts. "In this scenario, the company would need to make additional price increases," they wrote earlier this week.

When contacted, Petrobras did not respond to the interview request. The company usually says that it monitors the international market and only decides to make adjustments when international prices consolidate at new levels.

The company has not changed the price of the product in its refineries since September 17, when it promoted an increase of R$1 per liter.

The fuel market is concerned about the possibility of reducing subsidies after the election period. The measures were created to provide temporary relief in prices, but there is no prospect of progress in the geopolitical scenario.

Today, the government guarantees R$2.12 per liter for national diesel, R$3.52 per liter for imported diesel and R$0.89 per liter for gasoline — in this case, in the form of exemption from federal taxes. Removing these values ​​would have a significant impact on the pump price of the products.

Until August, the government estimated that it had spent R$32 billion on measures to maintain fuel prices in Brazil. Palácio do Planalto argues that it is transferring part of the extra revenue from oil royalties directly to the consumer.

Uncertainties regarding subsidies have led private companies to act more conservatively when it comes to imports, according to sources. However, there are still no signs of a risk of fuel shortages.

The president of Abicom (Brazilian Association of Fuel Importers), Sergio Araújo, says that the volume of imports expected for November is still small, but there will be a surplus from October's purchases and there is already a prospect of Russian diesel arriving in the country again.