Brazil Extends Fuel Subsidies and Tax Relief Measures Through July 2026 Amid Global Oil Market Volatility

Brazil’s government has announced a two-month extension of its fuel subsidy and tax relief measures, ensuring that support programs remain in place until July 31, 2026. The decision aims to protect consumers and businesses from rising fuel costs caused by ongoing volatility in global oil prices, particularly following geopolitical tensions in the Middle East.

Under the extended plan, emergency measures that were originally set to expire on May 31 will continue through the end of July. The government confirmed that diesel subsidies will remain available, providing refiners and fuel importers with financial support of 1.12 reais ($0.22) per liter starting June 1. Additionally, two separate subsidy initiatives introduced earlier this year will be consolidated into a single program designed to help stabilize fuel prices across the country.

Brazil’s Finance Ministry also unveiled a new subsidy mechanism for diesel producers and importers to offset tax-related expenses linked to fuel sales. This payment will replace the previous exemption from PIS and Cofins taxes on diesel while maintaining the same benefit value of 0.35 reais per liter.

Support for liquefied petroleum gas (LPG) has also been expanded. Federal funding for the LPG assistance program has doubled from 330 million reais to 660 million reais. The subsidy is expected to provide approximately 11 reais for every 13-kilogram cooking gas cylinder sold during the extension period, helping households manage essential energy costs.

Furthermore, the government extended exemptions from PIS and Cofins taxes on aviation kerosene and biodiesel used in mandatory diesel blends until July 31. Planning Minister Bruno Moretti noted that fuel prices have started to decline but emphasized the importance of maintaining support measures while uncertainty continues in international energy markets.

Although officials did not release updated fiscal cost estimates for the extension, previous projections placed the total cost of the relief package at roughly 10 billion reais. The administration maintains that revenue generated from oil export taxes and related sources will help offset expenses, allowing Brazil to stay on track with its 2026 fiscal goals while continuing efforts to stabilize domestic fuel prices.