Embargoes to Russia amplify diesel crisis and sector asks for protocol to guarantee supply

The European Union’s embargo on imports of oil and derivatives from Russia amplifies the crisis in the global diesel market and the sector is already discussing the need for a protocol to guarantee supply at the beginning of the second half of the year.

Distributors, importers and state agencies have been meeting in recent days to analyze alternatives. The government says that current stocks last for 38 days without depending on imports, but there is concern about possible disruptions in supply, due to problems in domestic or foreign refineries.

Therefore, fuel distributors are asking for the implementation of a crisis protocol similar to the one in effect during the 2018 truck drivers’ strike, when the entire sector met to plan the supply of fuel.

At that time, the concern was with supplies during the strike and with the rapid replenishment of stocks after the strike, which left gas stations all over the country.

Now, the idea is to plan imports in advance, to keep stocks at adequate levels. The price is no longer a cause for concern, said an executive heard by Sheetgiven the prospect of product shortages.

As in 2018, this protocol would be supervised by CADE (Administrative Council for Economic Defense) and ANP (National Agency for Petroleum, Gas and Biofuels).

The diesel supply crisis is global, reflecting the restrictions on imports from Russia and the increase in consumption for energy generation in Europe, which has also been suffering from cuts in gas supply.

Brazil depends on imports to supply a quarter of its domestic consumption of fuel and the sector was already experiencing difficulties both with the reduction of supply and with the high lag of domestic prices in relation to the international market.

“We heard of large distributors that went to the market and saw a reduction in the number of proposals. There were 10 and now there are 1”, says consultant Aurélio Amaral, former director of the ANP. “And you don’t buy over the counter, they are contracts from 30 to 60 days in advance.”

He points out that global stocks of so-called middle distillates, a category that includes diesel and jet fuel, have reached the lowest level since 2008, according to the IEA (International Energy Agency). The United States has the lowest volume of diesel inventories in 17 years.

With the tight world market, there is a greater risk of product shortages due to specific problems, such as the shutdown of refineries in the United States during the hurricane season in the Gulf of Mexico region, which concentrates a large part of the refining capacity in that country. .

The ANP has been meeting with companies in the sector to assess the scenario. There is also a working group at the MME (Ministry of Mines and Energy), which meets weekly to discuss the topic. So far, however, no proposal has been announced.

Biodiesel producers propose increase in blend to 14%

Brazilian biodiesel producers propose an increase in the blend to diesel sold at service stations, currently at 10%. The current proposal foresees an increase to 12% in June and then a gradual increase until reaching 14% in September.

The government fears impacts on the price of diesel, which is already at a record level. Petrobras calculates, for example, that the average price of biodiesel delivered today to distributors is R$7.40 per liter, while petroleum diesel leaves refineries, on average, at R$4.90 per liter.

Juan Diego Ferréz, chairman of the board of Ubrabio (Brazilian Union of Biodiesel and Bioquerosene), says that the impact of adding two percentage points to the mixture would be between R$ 0.05 and R$ 0.06 per liter. “It is more expensive to run out of diesel, imagine the producer not having diesel for his crops”, he defends.

According to him, the sector has enough stocks to meet the increase in the mixture already in June and, with signs that the percentage will be increased, it has time to increase production in the following months.