Brazil’s imports of Russian diesel soar, nearly ten times more than 2022

Under the administration of Luiz Inácio Lula da Silva (PT), Brazilian imports of Russian diesel have experienced a significant increase.

Data from the Ministry of Development, Industry, Commerce, and Services reveals that from January to May, purchases of Russian diesel reached US$910.6 million, nearly ten times more than the total for 2022.

The surge in Russian diesel imports is attributed to discounts offered by Russia to penetrate new markets and mitigate the impact of sanctions imposed by the United States and the European Union following the Kremlin’s invasion of Ukraine in February 2022, write Fábio Galão and John Lucas in a recent Gazeta do Povo article.

Brazilian importers, including Petrobras, have benefitted from these discounts, contributing to reduced fuel prices in Brazil and yielding political advantages for Lula.

In 2022, Russia ranked eighth in terms of diesel sales to Brazil, accounting for 1% of imports.

However, in the first four months of 2023, Russia climbed to second place with an 18% share, displacing the United States, which experienced a decrease in its market share from 58% to 33% during the same period, write Galão and Lucas.

The availability of cheap Russian diesel has posed a challenge to competitors as it is priced below domestic refineries and other imported sources.

Gabrielle Moreira, a diesel market specialist at Argus, highlighted to the journalists the difficulty of competing with Russian diesel in an interview with Reuters in April.

While the increase in Russian diesel imports benefits Brazilian importers and contributes to lower fuel prices, it raises ethical concerns as it indirectly supports Russia’s invasion of Ukraine.

This situation mirrors similar trends in energy imports from Russia by India and China following the conflict, enabling Russia to evade Western sanctions.

Lula’s international reputation has already suffered due to his refusal to support Ukraine.

In January, German Chancellor Olaf Scholz visited Lula seeking Brazilian assistance in supplying ammunition to Ukraine, receiving a negative response.

Lula faced further criticism in April when he made comments implying that two countries were equally responsible for the war in Ukraine.

He later condemned the violation of Ukraine’s territorial integrity and claimed Brazil’s neutrality while wanting to negotiate peace between the conflicting parties.

However, Brazil’s indirect financial support to Moscow through diesel imports questions its stated neutrality in the conflict.