Petrobras Joins Brazil’s New Diesel Subsidy Program

Brazilian state-controlled oil producer Petrobras has approved participation in a new federal diesel subsidy program as the government seeks to limit the impact of elevated fuel costs on consumers.

Petrobras’ board approved joining the program, which provides a subsidy of 1 real ($0.19) per liter of road diesel for an initial 30-day period. The measure can be extended for another 30 days and operates alongside an existing subsidy of 1.12 reais per liter, meaning the benefits from the two programs can be combined.

The decision follows a Petrobras pricing adjustment announced earlier in the week. The company increased diesel prices to distributors by 1 real per liter while simultaneously applying a discount of the same amount under the government subsidy. As a result, the effective price paid by distributors remains unchanged, while Petrobras becomes eligible to receive the government support.

Petrobras said participation in the subsidy program is voluntary and consistent with the company’s interests. The oil producer said it continues to pursue a commercial strategy focused on maintaining market share, optimizing refinery assets and generating sustainable returns while limiting the immediate transmission of international oil and foreign-exchange volatility to domestic fuel prices.

Separately, Petrobras said it received 448 million reais from Brazil’s gasoline subsidy program for sales made between July 16 and July 31. The latest payment increased the total amount received by Petrobras through government subsidy programs covering diesel, gasoline and liquefied petroleum gas, or LPG, to approximately 9.9 billion reais.

The fuel-support measures come as Brazil faces pressure from higher global energy costs. President Luiz Inácio Lula da Silva’s government has used fuel subsidies to soften the domestic impact of elevated oil prices ahead of Brazil’s October presidential election, in which Lula is seeking another term.