Brazil could phase out its emergency fuel subsidies if global crude oil prices stabilize around $80 per barrel, according to Finance Ministry Executive Secretary Rogerio Ceron. Speaking to Reuters, Ceron said recent progress toward a U.S.-Iran agreement and easing tensions in the Middle East have helped push Brent crude prices below $80 a barrel. He noted that the next 30 days will be crucial in determining whether the government can safely withdraw the support measures introduced earlier this year to cushion consumers from rising fuel costs.
Since the conflict began in February, President Luiz Inacio Lula da Silva’s administration has implemented tax cuts and subsidies on diesel, gasoline, jet fuel, and cooking gas to offset higher energy prices. Many of these measures are due to expire in July, and Ceron said the government is considering either allowing them to lapse as scheduled or ending them earlier if market conditions remain favorable. He added that the strengthening of Brazil’s currency has helped reduce inflationary pressure despite oil prices remaining above levels seen earlier in the year.
Ceron also argued that the recent rise in inflation forecasts was largely driven by the conflict-related surge in oil prices rather than government spending. He dismissed estimates that Brazil’s economy has received more than 200 billion reais in stimulus this year, saying economic data points to slowing growth rather than overheating demand. With inflation pressures expected to ease, Ceron suggested Brazil’s central bank could gain greater flexibility to continue lowering interest rates while the government explores new financing initiatives, including potential sustainable bond issuances and a possible sovereign yuan bond offering.
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