After the EU cut energy ties with Russia post-Ukraine invasion, Brazil emerged as the top importer of Russian diesel.
In 2022, Brazil’s imports stood at 101,000 tons for $95 million, soaring to 6.1 million tons costing $4.5 billion in 2023.
This shift positioned Brazil ahead, with over 90% of its diesel at times sourced from Russia and oil imports up by 400%.
Rystad Energy’s Raphael Faucz links this surge to the EU’s full sanctions against Russian diesel, replacing US and India imports.
“Brazil filled the void as Russia sought new markets,” adds Matt Smith from Kepler Research.
Russia’s daily diesel exports are around 950,000 barrels, with 70% previously destined for the EU and UK.
Lower prices and high demand benefited Brazil, says Abicom’s Sérgio Araújo, passing savings to consumers.
Matthew Kohlman from Platts notes Brazil’s economic growth, especially in agriculture, stressing the need for imports due to local refinery shortfalls.
This import shift, propelled by private sector dynamics, hasn’t sparked significant US or EU intervention amidst global inflation and fuel price concerns.
Faucz doubts increased Western pressure on Brazil to halt Russian diesel imports.
A temporary Russian export ban in September 2023 prompted Brazil to seek alternatives, but Araújo sees no operation risks.
A halt in Russian exports could spike global prices, affecting Brazil’s refinery benchmarks and reducing importers’ margins, impacting consumer diesel prices.
Despite sanctions, Brazil may continue Russian diesel imports in 2024, attracted by discounts and favorable market conditions.
Araújo anticipates a slight import increase, driven by GDP growth and diesel demand.
“Russia’s discounted diesel remains the best option for importers,” he concludes, indicating a sustained import trend into 2024.