Court Blocks Brazil’s War-Era Oil Export Tax

The legal battle over Brazil’s oil export tax has produced its first casualty: the government’s claim that the levy is a regulatory instrument, not a revenue grab. A federal court ruling suspending the 12% tax for five multinational producers strikes at the foundation of Lula’s war-era fuel package — and the government’s appeal signals the fight is heading to higher courts fast.

The Brazil oil export tax took its first legal hit on April 7 when Judge Humberto de Vasconcelos Sampaio of the 1st Federal Court of Rio de Janeiro granted an injunction suspending the 12% levy for Shell Brasil, Equinor, TotalEnergies, Petrogal, and Repsol Sinopec, as reported by Agência Brasil and Gazeta do Povo. The five multinationals had filed a joint writ of mandamus arguing that the tax, created by Medida Provisória 1.340/2026 on March 12, has a purely fiscal purpose — meaning it should be subject to the constitutional principle of anterioridade, which prohibits new taxes from taking effect immediately. The judge agreed, writing that the MP “reveals in an unequivocal manner the fiscal purpose of the measure” and constitutes a “true deviation of purpose.”

The ruling goes further than simple suspension. It also bars the government from imposing any penalties, blocking tax clearance certificates, or inscribing the companies in the federal debtor registry (Cadin) as a result of non-payment. In practical terms, the five producers can now export crude without the 12% surcharge while the case proceeds, though the government’s appeal could reverse the injunction within days.

The Fiscal Math at Stake

The export tax is the revenue engine of Lula’s entire war-era fuel package. When the government signed the measures on March 12, Finance Minister Dario Durigan presented the math as fiscally neutral: zeroing PIS and Cofins on diesel costs R$20 billion (~$3.4 billion), the R$0.32 per liter producer subsidy costs another R$10 billion (~$1.7 billion), and the 12% oil export tax was expected to generate roughly R$30 billion (~$5.2 billion) to cover both. Without the tax, the fuel relief becomes a R$30 billion deficit with no offset — a hole the government cannot afford six months before a general election.

The Procuradoria-Geral da Fazenda Nacional (PGFN) filed an interlocutory appeal (agravo de instrumento) with the Regional Federal Tribunal of the 2nd Region (TRF2), which has jurisdiction over Rio de Janeiro and Espírito Santo. The government’s core argument is that the export tax is not a new levy but a rate adjustment on an existing regulatory instrument — one designed to discourage crude exports during a supply crisis and keep petroleum flowing to domestic refineries. Under this framing, the anterioridade principle does not apply, and the tax can take effect immediately.

A Ruling With a Disputed Foundation

The case has an unusual wrinkle. The specialized outlet Eixos reported that Judge Sampaio’s ruling quotes three paragraphs from Article 10 of MP 1.340 that do not appear in the actual published text of the measure. One of the non-existent paragraphs states that export tax revenue “shall be destined to meet the Union’s emergency fiscal needs” — language the judge then used as the primary basis for concluding the tax is arrecadatório (revenue-driven) rather than regulatório (market-regulating). The real text of Article 10 sets the 12% rate and authorizes the Finance Minister to adjust it, but contains no such earmarking clause. If confirmed, the discrepancy could become a factor in the appeal.

Industry vs. Government: The Broader Fight

The five plaintiffs are all non-Brazilian multinationals operating pre-salt and other offshore blocks. Petrobras, the state-controlled producer that accounts for the majority of Brazil’s crude exports, is not party to the lawsuit and has publicly supported the fuel relief package. The Instituto Brasileiro de Petróleo, Gás e Biocombustíveis (IBP) — the industry lobby — has criticized the export tax since its announcement, arguing it “imposes an unnecessary burden on a sector that already directs approximately 70% of its revenue to taxes and government participation fees.” The IBP has also warned that the tax could undermine the ANP’s June auction of exploration blocks by signaling to international bidders that Brazil’s fiscal framework for oil revenues can shift overnight by executive decree.

The legal challenge we reported on in March has now materialized exactly as the industry signaled. Additional lawsuits from other producers and importers are expected. The trucker strike threat that prompted the government’s urgency has not dissipated — diesel prices remain elevated despite the package, and Petrobras’s separate refinery price increase undercut the subsidy’s impact within days of its launch.

The TRF2 is expected to rule on the government’s appeal within days. If the injunction is upheld, Lula faces a choice: find alternative revenue to fund the fuel relief, accept the fiscal hit, or escalate to the Superior Tribunal de Justiça or the Supremo Tribunal Federal. The ceasefire that briefly crashed Brent to $93 offered a temporary reprieve, but with the deal already fraying, oil prices are climbing again — and the fiscal pressure behind the export tax is not going away.

Related Coverage: Brazil Diesel Tax Cut Offset by Oil Export Levy • Brazil Oil Export Tax Faces Legal Challenge • Trucker Strike Threat Grows as Diesel Surges • Brent Crashes to $93 and LATAM Oil Map Flips