Under Lula, imports of Russian diesel soar, help lower prices and finance war in Ukraine

Since the beginning of Luiz Inácio Lula da Silva’s (PT) government, Brazilian imports of Russian diesel have skyrocketed. According to data from the Ministry of Development, Industry, Trade and Services, from January to May, purchases of this product from Russia totaled US$ 910.6 million, almost ten times more than in comparison with the entire 2022.

Purchases of Russian diesel this year already represent more than the sum of imports added between 2010 and last year (see infographic below).

In a report for the website of the American magazine The National Interest, Leonardo Coutinho, columnist for People’s Gazettehighlighted that the Russians are offering discounts of US$ 25 to US$ 35 per barrel to reach new markets and circumvent the damage of the sanctions imposed by the United States and the European Union due to the invasion that the Kremlin promoted to Ukraine in February 2022. Among the Brazilian importers that benefited from these discounts is Petrobras, highlighted Coutinho.

The importation of this cheap Russian diesel helped to reduce the price of fuel in Brazil, generating political dividends for Lula. According to Leggio Consultoria figures provided to the BNamericas website, in 2022, Russia was only the eighth country that most sold diesel to Brazil, accounting for 1% of Brazilian imports of this product. It was behind the United States, India, United Arab Emirates, Saudi Arabia, Netherlands, Kuwait and Togo.

In the first quarter of 2023, Russia jumped to second place, with 18% of sales. The United States was the most affected by this change: although it remains the country that most exports diesel to Brazil, its share has fallen from 58% to 33% since last year.

“It is difficult to compete, Russian diesel arrives below the sale price of domestic refineries and below the value of the product imported from other sources”, said Gabrielle Moreira, diesel market specialist at the commodities monitoring agency Argus, in an interview with Reuters in April.

This increase in purchases by Brazilian importers, which takes place with the consent of the government (which did not impose sanctions on Russia), brings with it an ethical conflict, because Brazil ends up indirectly financing, through the import of cheap diesel, the Russian invasion of Ukraine .

India and China have also increased imports of energy from Russia since the start of the conflict, which has helped Vladimir Putin’s country to circumvent sanctions imposed by the West. The increase in imports of Russian diesel by Brazil coincided with the start of European Union sanctions on refined products from Russia.

Lula’s image was already tarnished internationally for refusing to help the Ukrainians. In January, he received a visit from the German Chancellor, Olaf Scholz, who was seeking Brazilian support to supply Ukraine with ammunition and took a negative response to Berlin.

Afterwards, Lula was heavily criticized in April when he commented on the conflict in Ukraine, when he said that “the decision to go to war was taken by two countries”.

Faced with the negative repercussions, he condemned “the violation of Ukraine’s territorial integrity” and said that Brazil seeks to remain “neutral” in order to negotiate peace between the two countries. This neutrality, however, is challenged by Brazil’s indirect financial aid to Moscow in the conflict.