War in the Middle East worsens the fuel crisis, already affecting inflation and supply in Brazil

PF operates in 11 states and the DF to combat abusive fuel prices Just like the war in the Middle East, the fuel crisis is not expected to end and is already having an impact on inflation, decisions on interest rates and even supply in the country. This Friday, the National Agency for Petroleum, Natural Gas and Biofuels (ANP) showed that a liter of diesel has increased by almost 24% at gas stations since the start of the conflict, going from R$6.03 to R$7.45, on average. 🗒️Do you have any reporting suggestions? Send it to g1 Gasoline is also heavier on your pocket, with an increase of 8% in the same period. It went from R$6.28 to R$6.78 per liter, on average. During the week, the US gave signs that the conflict could cool down, indicating the possibility of a ceasefire. But Israel has said it will expand attacks on Iran and has bombed an Iranian Navy missile production center and a uranium plant. Result: a barrel of Brent oil, the raw material for fuel, returned to US$120. Analysts warn that, if the war continues and problems in the global supply of the commodity worsen, the trend is for an even greater increase. Meanwhile, the Brazilian government is racing against time to prevent this jump in fuel prices from triggering an inflationary crisis in an election year. President Luiz Inácio Lula da Silva (PT) announced a package of measures that provided incentives for the sector and eliminated federal taxes on diesel. He also asked governors to also eliminate ICMS on fuels, but the proposal was rejected. This Friday, the executive secretary of the Ministry of Finance, Rogério Ceron, stated that a “relevant” number of states accepted a second proposal, which provides for aid of R$1.20 per liter of imported diesel until the end of May, with costs divided equally between the Union and states. Ceron did not specify how many states have joined or which states they are. Meanwhile, trade unions are already reporting a lack of fuel at some stations across the country, and the Federal Police have launched an operation against abusive price increases. Lagging price One of the main obstacles is the lag in the price of diesel in relation to the international market. Diesel produced in Brazil is cheaper than abroad, while imports become more expensive. The weekly survey by the Brazilian Association of Fuel Importers (Abicom) indicates that prices charged at Petrobras refineries are now well below international market values. In the case of diesel, the average difference reached around 65% on March 24 — equivalent to R$2.34 per liter below import parity. In gasoline, the gap was around 45%, or R$1.13 per liter. See the graph below: With domestic prices lower than those practiced abroad, private importers stop purchasing and reduce their presence in the market. BTG Pactual bank estimates that the activity of these operators fell by around 60%. Today, around 30% of the diesel consumed in Brazil is imported. With fewer companies bringing the product from abroad, the market becomes more dependent on supplies from Petrobras. From there, two risks arise: lack of product or price increase — sometimes both. In Rio Grande do Sul, a survey by the state’s Petroleum Derivatives Retail Trade Union (Sulpetro) indicates that 88% of stations, including branded and independent ones, received fuel only partially. The entity’s president, Fabricio Severo Braz, states that there are difficulties in purchasing gasoline and diesel due to the quotas established by Petrobras. According to him, there is no general lack of fuel, but occasional episodes of interruption in supply. “Since the beginning of the conflict in the Middle East, in recent weeks, we have observed more restricted purchases by most associated stations, as distributors are delivering products on a rationed basis”, comments Braz. The Rio de Janeiro regional union (Sindcomb) indicated that there is instability in the delivery of fuel in the municipality, with private brand stations reporting shortages. “Stations with loyalty contracts have been served with volume restrictions, but the most severe impact falls on private brand stations. The lack of regular supply to these establishments already results in empty pumps in several regions of the city”, it says in a note. In São Paulo, the president of the regional union (Sincopetro), José Alberto Gouveia, states that the independent network — which represents 30% of jobs in the state — has faced difficulties not only in supplying supplies, but also in maintaining the business. “The reality is that the companies that imported and sold fuel to these independent companies today buy the most expensive product abroad and have to sell it cheaper in Brazil, which makes the operation very difficult”, he states. Petrobras auctions and government package To overcome the lack of fuel in certain regions of the country, Petrobras announced an increase in supply and held auctions to sell part of its production. According to an analysis by Banco do Brasil, fuels were sold at prices well above the reference price in these auctions. In some areas of the North and Northeast, this difference reached up to R$2.65 per liter. For the president of the Brazilian Association of Fuel Importers (Abicom), Sérgio Araújo, these values ​​indicate a mismatch between prices practiced in Brazil and international market conditions. “It is clear that Petrobras’ price is very out of date and that distributors need to pass on this increase in cost. Some consumers are not agreeing to pay, which has caused supply problems”, says Araújo. According to Daniel Cobucci, an analyst at BB Investimentos, the aid package announced by the federal government — which seeks to preserve the sector’s profitability and reduce the pressure of rising oil prices on inflation — could encourage oil processing in the country and favor private refineries. Not everyone, however, should benefit from the changes. “For independent oil companies, the export tax should reduce part of the extraordinary gains from the rise in the commodity, with the possibility of legal action”, says the expert. Oil at the center of economic uncertainty For analysts at BTG Pactual, the behavior of oil, pressured by the geopolitical conflict, began to occupy a central role in projections for the economy. According to the bank, the rise in the commodity can influence not only inflation, but also decisions on the basic interest rate in Brazil, the Selic. “Although the standard monetary policy recommendation in these cases is to react only to second-order effects, the recent magnitude of the movement increases the risk of unanchoring expectations, contamination of underlying inflation and greater inflationary inertia,” they say. The Central Bank has already shown concern about the war in the Middle East. The Monetary Policy Committee (Copom) reduced the Selic rate to 14.75% per year at its March meeting. But he failed to indicate new cuts in upcoming meetings and cited the conflict four times in the statement as a source of uncertainty for future decisions. Increasing (or keeping high) the interest rate is the mechanism that the Central Bank uses to control inflation. And the chief economist at Banco do Brasil, Marcelo Rebelo, calculates that the oil shock could add around 0.6 percentage points to the Broad Consumer Price Index (IPCA) of 2026. Despite this effect, Rebelo claims that Brazil has some capacity to absorb shocks of this type. This is because the country also exports oil and tends to benefit, at least partially, from rising prices on the international market. According to him, as Brazil sells more oil and oil products abroad than it buys from other countries, it tends to partially benefit from rising prices on the international market. “The price increase increases the trade surplus and improves the country’s terms of trade”, he states. Even so, the impact reaches the consumer’s daily life, mainly through fuel and transport, which have a relevant weight in the formation of inflation measured by the IPCA. War in the Middle East makes the Brazilian government eliminate taxes on diesel and tax oil exports Jornal Nacional/ Reproduction

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