Petrobras Cuts Diesel, Squeezing Brazil's Farmers

Brazilian state-run oil company Petrobras is currently not fulfilling requests from fuel distributors for additional diesel. This decision comes as domestic diesel prices have fallen to a record discount compared to global market prices. The significant price difference is causing supply tensions and affecting sales, particularly impacting Brazil's crucial agricultural sector during its peak harvest season.

Sources indicate that Petrobras is adhering strictly to contracted volumes, unwilling to supply extra fuel for distributors to stockpile at lower prices. This strategy aims to prevent distributors from profiting when Petrobras eventually adjusts its prices upwards. The situation is particularly concerning for farmers harvesting a record soybean crop and planting corn, as any increase in diesel prices would directly raise their operational costs.

Concerns are escalating in regions like Rio Grande do Sul, a major agricultural state, where farmers have reported difficulties in obtaining diesel. While the oil regulator ANP has stated that sufficient stocks exist, industry representatives suggest the issue lies in buyers seeking the current low Petrobras prices while sellers seek higher prices to hedge against future increases.