Brazil Diesel Supply Threatened by Tariff Risks and Import Shifts
Bruno Santos, StoneX Brazil Market Intelligence Analyst, discusses Brazil’s dependence on Russian diesel, the risks of U.S. tariffs, and efforts to diversify supply.
Key Takeaways
Brazil now sources over half of its diesel imports from Russia
U.S. tariff threats create major risks for Brazilian trade
Efforts to diversify supply are underway but remain limited
How Brazil Became Dependent on Russian Diesel
Brazil’s reliance on Russian diesel emerged after the Ukraine war reduced Russian exports to Europe. Suppliers redirected flows to markets such as South America, making fuel financially attractive with discounted prices. Santos explained that before the conflict, the United States was Brazil’s main supplier due to logistical advantages. Russia’s pricing strategy, however, shifted that balance, even with higher transport costs.
The Risks of Tariffs and Geopolitical Exposure
The White House has signaled potential retaliatory tariffs against countries importing Russian energy. Santos noted that India already faced higher tariffs and that Brazil could see similar treatment. “Brazil nowadays already have higher tariffs for many products that we export to the United States, around 50% of tariffs”. This exposure adds new risks to an economy already dependent on energy and agricultural trade.
Lessons from India and Fertilizer Reliance
India scaled back imports but still faced penalties, a warning for Brazil. The problem extends beyond diesel, as fertilizers sourced from Russia remain essential for Brazilian agriculture. Santos highlighted that local production cannot cover demand, making diversification both urgent and difficult.
Efforts to Diversify Supply
There are signs of change. In August, U.S. shipments overtook Russia as Brazil’s top diesel supplier, with India also increasing volumes. Lower international oil prices and logistical advantages have supported this shift. Still, Santos cautioned that “it will be really difficult for Brazil to suspend totally our Russian diesel imports”, especially during peak agricultural demand. For now, diversification is a work in progress, with risks still firmly in play.
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---- Written by Frederic Guetin, StoneX TV Producer
---- Expert: Bruno Santos, StoneX Brazil Market Intelligence Analyst
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