Brazil Extends Diesel Subsidy as Global Oil Prices Stay Volatile

Brazil's finance ministry has extended the country's diesel fuel subsidy at its present level, pointing to continued turbulence in international oil and fuel markets. The new decree takes effect on Sunday, replacing an earlier order that lapsed on Friday, and keeps the full benefit intact.

The support began at 1.12 reais per litre in late May before being raised to 2.12 reais per litre earlier this month as oil prices deteriorated.

Planning Minister Bruno Moretti had indicated on Thursday that an extension was on the cards, subject to a final call by President Luiz Inacio Lula da Silva.

Moretti said the oil price shock stemming from the Middle East conflict had generated 50 billion reais in extraordinary revenue, against 40 billion reais in spending meant to cushion its impact.

The government intends to wind down the benefit once the oil price shock from the Middle East conflict eases.

The move comes ahead of Brazil's general election, with the first round scheduled for October 4. Lula is in a tight contest with his leading right-wing rival, Senator Flavio Bolsonaro.