Brasilia, July 1, 2026 (Lusa) – Brazil's government announced on Tuesday the start of a gradual phaseout of fuel subsidies following a ceasefire agreement between the United States and Iran.
Part of the diesel subsidy is set to end on Wednesday, whilst the subsidy that keeps petrol prices lower is due to be phased out in the coming days, according to Finance Minister Dario Durigan.
During a press conference, Durigan explained that the measure was possible because the international price of oil had returned to levels close to those recorded before the conflict in the Middle East.
“We have been vigilant and ready to implement measures to avoid being complicit in the war and to stabilise prices, but we will remain vigilant and be ready to withdraw and reverse these measures,” he said.
In this first phase, the government will withdraw only the 35-centavos (€0.06) subsidy per litre of diesel, while the other subsidies remain in place and are subject to review by the Brazilian government.
“We are removing the subsidy of thirty-five centavos per litre of diesel from tomorrow, and we will continue,” declared Durigan.
“We are reviewing the other diesel subsidy, which stands at 1.12 reais per litre, and, in particular, the petrol subsidy of 44 centavos per litre,” said Durigan.
The economic team emphasised that the remaining tax exemptions, which are still in force, such as those on cooking gas and biodiesel, will be determined on the basis of daily monitoring of market prices and the need to safeguard public finances.
The minister for planning and the budget, Bruno Moretti, explained that, as oil has become cheaper, the government’s extraordinary revenue from royalties and taxes on oil production and exports has consequently fallen.
“Provided this premise of fiscal neutrality is maintained, we will gradually phase out the subsidies so that our primary balance target is met, without any changes,” said Moretti.
The fuel subsidy package, launched in April to cushion the impact of the war on consumers’ pockets, has so far cost the Brazilian government 16 billion reais (€2.7 billion).
MYMA/ADB // ADB.
Lusa
