On the short-term altar

BRAZIL ECONOMICS - Report 13 Mar 2026 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

In response to the increase in international prices of oil and derivatives, although Petrobras had not yet commented on a possible pass-through to domestic prices, the government announced measures to limit a potential impact on the price of diesel.

It reduced to zero the PIS-Cofins tax levied on diesel, previously BRL 0.32/liter, and announced a subsidy of the same amount, BRL 0.32/liter, in practice allowing for a drop of up to BRL 0.64/liter in fuel prices.

We note that, according to ANP data, diesel sales in 2024 (2025 data are not yet available) reached 67.4 billion liters. If this level is maintained, the annual cost of these measures would reach BRL 43.2 billion. However, the subsidy is capped at BRL 10 billion and the tax reduction will, initially, be in force for only 4 months.

The fiscal impact of the measure, therefore, would be on the order of BRL 16 billion. To offset it, the government announced a 12% increase in the oil export tax and 50% in the case of diesel, also for 4 months. Exports of the latter are negligible, but in the case of oil, official estimates point to revenue of BRL 15 billion, so that, at least on paper, the fiscal effect would be practically null.

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