Brazil increases diesel imports from Russia and the US after the closure of the Strait of Hormuz.

Brazil has been turning to Russia and the United States to meet its diesel needs since fuel imports were suspended in March due to the escalation of the conflict in the Middle East and the closure of the Strait of Hormuz, according to a note from "Agência Brasil". According to data from the Comex Stat system of the Ministry of Development, Industry, Trade and Services (MDIC), purchases of Russian fuel more than doubled in two months. In March and April, Brazil imported US$1.76 billion worth of diesel, of which 81.25% came from Russia (US$1.43 billion). The United States came in second place, with 6.42% (US$112.92 million). Considering only April, the Russian share is even greater. Brazil bought US$924 million worth of diesel from the country (89.84% of the total) and US$104.44 million from the United States (10.98%). Completing the list is the import of US$4,264 million from the United Kingdom, representing only 0.001%. In March, Brazil managed to import diesel from the Middle East, thanks to ships that had left the Persian Gulf before the start of the conflict. Two months ago, the country purchased US$111.89 million from the United Arab Emirates (15.7% of the total imported in March) and US$99.23 million from Saudi Arabia (13.57%). Regarding Russia, fuel imports more than doubled. In February, Brazil had purchased US$433.22 million from the country. The value jumped to US$505.86 million in March and approached US$1 billion in April. Measures To deal with the effects of the war on the price of diesel for consumers, the government took a series of measures. In March, a provisional measure granted R$10 billion in subsidies for the import and marketing of the product. Furthermore, a decree signed by President Luiz Inácio Lula da Silva eliminated the Social Integration Program (PIS) and the Contribution for Social Security Financing (Cofins) for fuel, with an impact of R$ 20 billion on federal revenue. The tax cut should reduce the price per liter by R$ 0.32 at the refinery. The subsidy to producers and importers should have an impact of another R$ 0.32 per liter. According to the economic team, the losses in resources from the tax breaks were covered by the growth in oil royalty revenue, driven by the surge in the price of a barrel of oil. ICMS In April, the economic team created a program for states to reduce the Tax on the Circulation of Goods and Services (ICMS) on imported diesel, funded half by the states and half by the Union. Although the government extended the deadline for adherence until last Tuesday (5), only Rondônia did not adhere to the agreement. The measure reduces the price of diesel by R$1.20 per liter at the pump, at a cost of R$4 billion over two months. Initially, the Ministry of Finance had reported that this subsidy would cost R$3 billion. Back in April, the government announced an additional subsidy of R$0.80 per liter for diesel produced in Brazil, with an estimated cost of R$3 billion per month. In both cases, companies will have to prove that they are passing on the reduction to the consumer. 

This text was translated by machine from Brazilian Portuguese.