Brazil wants Russian diesel

Brazil is negotiating to buy cheaper diesel from Russia as part of a strategy to reduce domestic fuel prices, according to President Jair Bolsonaro.

The deal comes after Bolsonaro visited President Vladimir Putin in February, just days before Russia invaded Ukraine, in a bid to ensure a steady supply of fertiliser exports to Brazil.

“I’ll likely buy cheaper diesel from Russia,” Bolsonaro announced in Brasilia, adding that gasoline prices are also falling after most state governors agreed to reduce taxes on fuel. “Everything is going well in Brazil.”

High fuel prices and inflation have been the main economic challenges for Bolsonaro as he seeks re-election in October. The conservative leader has been trailing leftist former President Luiz Inacio Lula da Silva in all major opinion polls.

Despite sanctions imposed by the US and its allies on Russia, the Brazilian government has continued to negotiate with Moscow as it remains neutral about the conflict.

With the UK and European Union both set to eliminate seaborne imports of refined petroleum products - including diesel - from Russia, it should have plenty of spare fuel for other potential buyers such as Brazil. However, setting up the financial and physical logistics to reroute large volumes of clean petroleum product is unlikely to be easy, Russia’s refineries may end up producing less.

Bolsonaro, a far-right former army captain, gave no further details. Neither Bolsonaro’s office, nor Brazil’s Mining and Energy Ministry immediately responded to requests for comment.

“It makes sense and eventually could happen,” a senior Economy Ministry official said on condition of anonymity.

A senior official from state-run oil company Petroleo Brasileiro SA, or Petrobras, which supplies most fuel to the domestic market, said the idea was not surprising but raised concerns, without going into details.

Bolsonaro ignored US entreaties not to meet Putin.

For many Brazilians, Bolsonaro is responsible for the hardship now afflicting Latin America’s largest country. In the three years since the far-right populist became leader in 2019, the economy has grown only about 2 percent.

The Covid-19 pandemic killed 670,000 Brazilians, the second-highest death toll worldwide behind America’s one million, and inflation has soared this year to about 12 percent, hurting the poorest most.

A study released this month found more than 33 million Brazilians now suffer from hunger — 14m more than just two years ago. In the run-up to elections, voters are making their unhappiness clear.

Poll after poll shows Bolsonaro trailing Lula da Silva of the left-wing Workers’ party, by as many as 20 percentage points. Bolsonaro is a big fan of Donald Trump and like The Don, he has already claimed that if he loses the election he will not accept the results.