Imports of Russian diesel by large Brazilian companies suggests that companies are finding ways to buy from that sanctioned country while complying with international rules, marking a new phase in the competition of ex-port land terminal product in Brazil's ports.
The arrival of the tanker Bruno at the Paranagua port in Parana state this week, bringing diesel from Russia,is a sign of greater willingness from major importers to buy Russian fuel.
The presence of Russian diesel in Brazil has expanded thanks to its lower cost, a price drop caused mainly by sanctions applied by G7 member countries and the EU. Russian diesel is being offered at around 30¢/USG below US Gulf Coast product. At least six companies operating in Brazil are working with Russia and at least one major importer should receive between two and four vessels this month, sources said.
"Russian diesel trading by major importers should come as no surprise. It was a matter of time," one trader told Argus. Every company is studying ways to work with Russian product, especially those who are on the outside of negotiations, according to most participants.
Vibra, Raizen and Ipiranga are Brazil's three largest distributors, according to oil regulator ANP, and the companies' trading arms are significantly involved in the flow of foreign fuel into Brazil.
None of the firms confirmed acquiring diesel from Russia. Ipiranga said that it "acts in accordance with current regulations and legislation and does not comment on specific supply strategies." Raizen declined to comment on the matter. Vibra did not respond to questions.
Opaque pricing
The increase in the competitiveness of Russian diesel in the domestic market since February has raised questions among importers about the status of state-controlled Petrobras' fuel pricing policy.
Since assuming the presidency of the company in January, Jean Paul Prates has affirmed that Petrobras will use international prices as a reference without seeking parity — breaking from a policy adopted in 2016. So far, there has not been a formal statement on how the company will price fuel sold at its domestic refineries, despite clashes between Petrobras and Brazil's mines and energy ministry.
As the price of the Russian product has already been reflected at the retail level, distributors and importers are giving more attention to compliance rules that may hinder company negotiations with fuel originating in Russia.
Brazil does not restrict fuel imports from Russia. The market interpreted recent statements by President Luiz Inacio Lula da Silva on the conflict with Ukraine as a nod of support to Russia, which the president refutes. While the US is keeping an eye on the left-leaning executive's proximity to countries considered geopolitical rivals — such as Russia, China and Iran — North American refiners are paying attention to Brazilians' willingness to extend the diesel market's new dynamics.
US suppliers have lowered their prices to Brazil and other South American markets in recent weeks to maintain market share, a move that caught the eye of buyers unable to negotiate with Russia.
By Gabrielle Moreira
