Petrobras to auction diesel in Rio Grande do Sul state: Estado

Brazil’s state-controlled oil company, Petrobras (PETR3.SA), is set to auction 20 million liters of diesel in the southern state of Rio Grande do Sul to address reported supply shortages, according to sources familiar with the matter. The auction, scheduled for Wednesday, aims to stabilize market conditions amid growing concerns over fuel availability during the critical harvest season.

The move follows a significant price disparity between domestic diesel and international benchmarks, with Brazilian diesel currently trading at an 85% discount to global prices due to geopolitical tensions in the Middle East, including U.S.-Israeli actions against Iran. This imbalance has disrupted supply chains, as distributors hesitate to purchase fuel at low prices for fear of restocking at higher costs if Petrobras adjusts pricing. Petrobras has also restricted additional diesel sales beyond contractual obligations to prevent hoarding and speculative practices.

The agricultural sector, particularly in Rio Grande do Sul—a key soybean and corn-producing region—faces heightened risks as rising global prices threaten to increase operational costs for farmers. While the oil regulator ANP stated that the state has sufficient reserves to meet demand, industry officials noted pricing mismatches between buyers seeking current Petrobras rates and sellers hedging against potential price adjustments.

Petrobras has not yet commented publicly on the auction or its pricing strategy, emphasizing that it is evaluating global market volatility before making adjustments. The auction is seen as a targeted measure to address localized shortages without fully aligning domestic prices with global levels.