Middle East conflict pushes up oil prices, Brazilian government announces 30-day extension of gasoline subsidy

(1) On July 24, the Brazilian Ministry of Finance issued a statement announcing that, due to rising international oil prices caused by escalating tensions in the Middle East, the government has decided to extend the gasoline subsidy (0.44 reais per liter), originally set to expire on July 25, for an additional 30 days, continuing from July 26.(2) Finance Minister Dario Durigan stated that the funding for this subsidy extension comes from increased government revenue due to higher oil prices, such as oil royalty fees, and will not require additional fiscal expenditure.(3) Media outlets reported last week that the government planned to extend the fuel subsidy. Previously, at the end of June, Brazil reduced part of its diesel subsidy due to eased tensions in the Middle East and falling oil prices. However, as oil prices have not remained low, the current diesel subsidy of 1.12 reais per liter continues to be implemented.