Brazil has rolled out emergency measures to curb surging diesel prices, including eliminating PIS/Cofins taxes and introducing a BRL 0.32 per litre subsidy—targeting a total price cut of BRL 0.64 per litre—alongside export taxes and market controls to stabilise supply amid global oil disruptions.
Brazil’s government has enacted urgent measures to lower diesel prices as international oil costs spike due to armed conflict involving the US, Israel, and Iran, compounded by escalating tensions near the Strait of Hormuz—a strategic waterway carrying about 20% of global oil shipments.
The government’s response includes one Provisional Measure and three presidential decrees designed to shield Brazilian citizens, truck drivers, and key economic sectors from the severe price volatility triggered by geopolitical instability in this critical oil transit route.
Through a presidential decree (Decree No. 12,878), Brazil will remove PIS/Cofins taxes on diesel, eliminating the only federal taxes on the fuel and cutting prices by BRL 0.32 per litre.
Additionally, the Provisional Measure No. 1,340 introduces a BRL 0.32 per litre subsidy for diesel producers and importers. Together, these actions target a BRL 0.64 per litre reduction at pumps to ease costs across transportation, agriculture, and essential goods.
The subsidy programme runs from 12 March 2026 through 31 December 2026, with a BRL 10 billion spending cap. If this threshold is reached earlier, the subsidy terminates immediately.
Export taxes
To safeguard domestic supply and capture windfall profits from elevated oil prices, Brazil introduced export taxes: 12% on crude petroleum and 50% on diesel exports, while subsidies remain active.
The measures strengthen the National Agency of Petroleum, Natural Gas and Biofuels (ANP) with new monitoring tools to prevent price gouging and speculative stockpiling. Gas stations must display clear signage informing customers about the tax cuts and subsidies.
Tighter market controls
The National Agency of Petroleum, Natural Gas and Biofuels (ANP) received expanded authority to combat price manipulation and hoarding. Fuel stations must prominently display information about tax reductions and subsidies. Violators face steep penalties—abusive pricing during crises can trigger fines between BRL 50,000 and BRL 500 million.
On 12 March 2026, Vice President Geraldo Alckmin will convene with major private distributors controlling roughly 70% of Brazil’s fuel market to guarantee consumers receive full savings. The government seeks to protect citizens while controlling inflation on food and freight heavily reliant on road transport.
