Russia Now Supplies 81% of Brazil’s Diesel Amid Iran War
Key Points
—Brazil imported US$1.76 billion in diesel during March and April 2026, with Russia supplying US$1.43 billion (81.25%) and the United States in second place at US$112.92 million (6.42%), according to MDIC Comex Stat data.
—April alone saw the Russian share rise to 89.84% (US$924 million), as Middle East supply from the United Arab Emirates and Saudi Arabia evaporated from the 29% combined share Brazil received in March before the Hormuz crisis escalated.
—President Lula approved a R$10 billion (US$2.03 billion) subsidy package, zeroed PIS-Cofins on diesel at a R$20 billion (US$4.07 billion) federal-revenue cost, and added a R$1.20-per-litre ICMS reduction programme to contain pump-price impact.
Russia has emerged as the dominant diesel supplier to Brazil following the Iran-Hormuz oil crisis, capturing 81.25% of the US$1.76 billion in fuel imports during March and April 2026 according to Comex Stat data released this week. The Russian share rose to 89.84% in April alone, against the 0% the country had supplied as recently as 2022, while Middle East suppliers United Arab Emirates and Saudi Arabia disappeared after March. The Lula administration responded with a R$10 billion (US$2.03 billion) subsidy package, eliminated PIS-Cofins on diesel at a R$20 billion (US$4.07 billion) revenue cost, and added an ICMS reduction programme to insulate consumers and transporters from price shocks.
The Rio Times, the Latin American financial news outlet, reports that the Brazil Russia diesel pivot is the largest energy-flow realignment in Latin America since the Hormuz crisis began. Brazilian purchases from Russia tripled in two months: US$433.22 million in February, US$505.86 million in March, and US$924 million in April.
The Iran-Hormuz war that opened in late February closed the Persian Gulf strait to commercial shipping for extended periods, suspending the Middle East diesel-export pipeline that had previously supplied roughly 30% of Brazilian needs. The United Kingdom registered a residual US$4,264 in April, 0.001% of the total.
The Russian Pipeline and the Diesel Math
| Supplier | March-April 2026 share | April-only share |
|---|---|---|
| Russia | 81.25% (US$1.43B) | 89.84% (US$924M) |
| United States | 6.42% (US$112.92M) | 10.98% (US$104.44M) |
| United Arab Emirates | ~6.4% (US$111.89M, March) | 0% |
| Saudi Arabia | ~5.6% (US$99.23M, March) | 0% |
| United Kingdom | Residual | 0.001% (US$4,264) |
The March 2026 import mix retained a partial Middle East presence because some tankers had left the Persian Gulf before the Hormuz crisis escalated. The UAE supplied 15.7% of March imports and Saudi Arabia 13.57%. Both disappeared in April when the supply route closed.
Russian diesel reaches Brazil through Mediterranean and Black Sea ports, transiting via the Suez Canal or, on selected cargoes, the longer Cape of Good Hope route. The Brazilian buyer mix is dominated by independent traders and the regional refining-system supply chain, with the discount on Russian Urals-grade diesel against Brent-linked benchmarks justifying the higher freight rates.
The R$10 Billion Subsidy Architecture
President Lula signed a March 2026 medida provisória releasing R$10 billion (US$2.03 billion) in subsidies for diesel imports and commercialisation. A parallel decree zeroed PIS-Cofins on diesel, with a R$20 billion (US$4.07 billion) cost to federal tax revenues. The Ministry of Finance argues the loss is offset by higher oil-royalty revenues driven by Brent above US$100.
The PIS-Cofins removal alone is calculated to reduce the refinery-gate diesel price by R$0.32 (US$0.07) per litre, with another R$0.32 cut from the import and producer subvention. The combined R$0.64 (US$0.13) per-litre price relief targets the pump-price transmission to the freight sector and consumer inflation.
In April the federal government launched an additional ICMS-reduction programme that splits the cost between the Union and state governments, targeting a R$1.20 (US$0.24) per-litre cut at the pump. The total programme cost is R$4 billion (US$813 million) over two months. Rondônia is the only Brazilian state that has not joined the agreement.
The Geopolitical Question Mark
An additional R$0.80 (US$0.16) per-litre subvention for Brazil-produced diesel applies separately, with a R$3 billion (US$610 million) monthly impact. Beneficiary companies must demonstrate the price reduction has been passed through to consumers. The compound subsidy and tax-cut programme totals roughly R$45 billion (US$9.15 billion) on an annualised basis, making it one of the largest fuel-price-stabilisation interventions in Brazilian fiscal history.
The 81% Russian dependence raises a sovereignty question of its own. Brazil’s BRICS membership and its existing diplomatic relationship with Moscow facilitate the trade flow, but expose the country to potential secondary-sanctions risk from the Trump administration, which has tightened restrictions on Iranian oil to China and has previously signalled scrutiny of Russian energy buyers. The Itamaraty maintains that the diesel trade complies with all international agreements.
Connected Coverage
The diesel pivot fits inside the broader oil-shock narrative covered in our Petrobras Q1 record results, where Brent prices below the Q1 average partly masked the upside-revenue story now expected to materialise in Q2. The Boletim Focus reaction to fuel-driven inflation is mapped in our Boletim Focus IPCA analysis.
The full geopolitical backdrop is set out in our Iran War and Hormuz Crisis 2026 guide, with the broader Brazilian fiscal context in the Brazil Economy 2026 complete guide.
What to Watch
- May Comex Stat release: whether Russian share rises further or US suppliers regain ground from the 10.98% April reading.
- Trump administration secondary-sanctions risk: any indication that Russian-diesel buyers face new restrictions following the May 11 Iran-China oil sanctions.
- Petrobras Q2 diesel-output trajectory: how Brazilian refining domestic share moves against the import pipeline through Q2.
- Subsidy programme renewal: whether the R$10 billion package and PIS-Cofins exemption extend into Q3 if Brent and Hormuz disruption persist.
- Inflation transmission: how the R$1.84 per-litre combined relief feeds through to May and June IPCA prints, the central question for Copom’s June 17-18 meeting.
Frequently Asked Questions
How much diesel does Brazil import from Russia?
Brazil imported US$1.43 billion in Russian diesel during March and April 2026, equivalent to 81.25% of the US$1.76 billion total. In April alone, the Russian share rose to 89.84% (US$924 million), with the United States supplying 10.98% and the United Kingdom a residual 0.001%.
Why did Brazil stop importing Middle East diesel?
The Iran-Hormuz war that escalated in late February 2026 closed the Persian Gulf strait to commercial shipping. UAE supplied 15.7% and Saudi Arabia 13.57% of Brazilian diesel in March because tankers had left port before the crisis, but both supplies disappeared in April. Russia and the United States filled the gap.
What is Brazil’s diesel subsidy programme?
Lula approved a R$10 billion (US$2.03 billion) March subsidy for imports and commercialisation, plus a PIS-Cofins exemption costing R$20 billion (US$4.07 billion). The April ICMS-cut programme adds R$4 billion over 2 months. The combined relief targets R$1.84 per litre at the pump.
Does Brazil face sanctions risk for buying Russian diesel?
Brazil’s BRICS membership and trade flows comply with international agreements according to Itamaraty. The Trump administration on May 11 imposed new sanctions to block Iranian oil sales to China, raising the question of whether secondary measures will target the 81% Russian-diesel pipeline that now sustains Brazilian transport and logistics.
Updated: 2026-05-12T11:30:00Z
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