Petrobras CEO Affirms Russian Diesel's Loss of Competitiveness in Brazil

08 Nov, 2023

Petrobras CEO Affirms Russian Diesel's Loss of Competitiveness in Brazil

The chief executive of Brazil's state-run oil company, Petrobras, has confirmed that Russian diesel is no longer competitive in the Brazilian market. This statement came in response to a decline in imports of the fuel by local firms.

CEO Jean Paul Prates made it clear that Russian diesel, which was once a more affordable option, is facing challenges in Brazil. He mentioned this during an event held in Rio de Janeiro, stating, "Russian diesel was a sanctioned diesel, it was cheaper."

The decline in competitiveness can be attributed to Western sanctions imposed on Russian fuel following the country's invasion of Ukraine last year. Initially, these sanctions led to lower prices for other buyers. However, as Prates explained, "From a certain point on, prices became the same, and it was no longer worth importing."

The shift away from Russian diesel is evident in the statistics. In August, Russian diesel accounted for nearly three-quarters of all diesel imports to Brazil. However, by October, its share had dropped significantly to only 42.1%, according to analysis by StoneX's Bruno Cordeiro.

The first ten months of the year saw Brazil import 11.72 billion liters of diesel, which represents a 15.7% decrease compared to the previous year. StoneX attributed this decline to increased domestic production and a higher requirement for biodiesel in the fuel blend.

Petrobras played a pivotal role in boosting domestic diesel production, reporting record output and sales of its S-10 diesel in the third quarter. This growth in domestic market share highlights Petrobras' competitiveness and adaptability, positioning it as the cornerstone of national fuel supply, as emphasized by CEO Prates.