Brazil to Phase Out R$ 0.44 Gasoline Subsidy Next Week

Brazil is preparing to roll back its domestic fuel incentives, with Finance Minister Dario Durigan announcing that the government will reverse the R$ 0.44 per liter gasoline subsidy next week. The decision follows the termination of a R$ 0.35 per liter diesel subsidy, which expired on Wednesday. The phase-out of these measures comes as global Brent crude prices stabilize near $70 per barrel, down from the peak levels of nearly $120 seen during heightened Middle East tensions.

The emergency subsidies were originally enacted to protect domestic consumers from supply disruptions and sudden price spikes. However, the economic team is now moving to ease fiscal pressures on the federal budget. While the removal of the R$ 0.44 gasoline subsidy will improve the country's fiscal balance sheet, it is expected to put upward pressure on domestic fuel prices and inflation.

The policy shift is drawing close attention from financial markets as investors assess the impact on state-run oil firm Petrobras and broader monetary policy. In today's trading, Petrobras preferred shares (PETR4) edged up 0.08% to R$ 37.83, while Vale (VALE3) rose 0.12% to R$ 77.97, and Itaú Unibanco (ITUB4) gained 0.62% to R$ 42.44. Meanwhile, the benchmark Bovespa index (IBOV) slipped 0.20% to 171,688.61 points, reflecting cautious sentiment amid shifting fiscal dynamics and the USD/BRL currency outlook.