Brazil buys record amount of petrol from sanctions-hit Russia

Brazil is set to import a record quantity of Russian petroleum this month, cementing Russia's status as the Latin American country's main supplier as Moscow seeks new markets in the aftermath of a European Union embargo.

Projections indicate that Brazilian imports of Russian petroleum products are anticipated to surge by 25 percentcompared to July, reaching an impressive daily intake of over 235,000 barrels. These figures notably outstrip the quantities sourced from the United States, which once held the distinction of being Brazil's predominant foreign petroleum supplier.

The surge in Brazilian-Russian petroleum trade commenced in February, coinciding with the EU's implementation of a ban on Russian petroleum imports and the collaborative imposition of a cap on Russian petroleum prices by the Group of Seven nations.

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Furthermore, this concerted effort by the United States and its allied countries aims to curtail the influx of petrodollars into Russia, thereby diminishing support for the nation's involvement in the Ukrainian conflict. Consequently, these initiatives have exerted downward pressure on Russian gasoline prices, strategically aligning with Moscow's bid to enhance its competitiveness in emerging markets.

Bloomberg cited Viktor Katona, the lead crude analyst at Kpler, stating that "getting discounted barrels is a financial boon" to Brazil, where the government is always under pressure to lower the cost of transport fuels.

The price ceiling for Russian premium oil products such as diesel is set at $100 per barrel, while the price ceiling for discounted gasoline is fixed at $45 per barrel. Companies in the G-7 can only transport Russian oil if the shipment costs less than those rates. Katona thinks that purchasing Russian diesel has reduced Brazil's imported gasoline prices by $10 to $15 per barrel.

Moreover, according to Kpler, since the quota went into force, Brazil has become the world's second-largest user of Russian diesel, after only Turkey. Brazil has attempted to remain impartial about who is to blame for the war.

(Inputs from Bloomberg)

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