Federal levies on petrol imports and retail sales were lifted for a 30-day window, while importers of diesel received expanded financial support, as the administration moved to hold down pump prices before voters return to the polls on 25 October for the presidential runoff. The measures were unveiled on Friday, 9 October, following a period in which conflict across the Middle East contributed to upward movement in global oil prices, placing additional strain on household costs.

Lula — who would be entering a fourth, non-consecutive presidential term if successful — faces a challenge from Flávio Bolsonaro, the eldest son of former president Jair Bolsonaro, in the upcoming contest.

A freshly issued decree lifted the tax relief applied to petrol imports and retail sales, pushing the per-litre reduction from 0.63 reais up to 0.89 reais, the equivalent of roughly $0.18. Three federal levies on fuel — PIS/Pasep, Cofins, and CIDE — fall under the exemption, which Brazil's Finance Ministry set at a 30-day window, with renewal left open as a possibility.

Diesel importers stand to receive a layered support arrangement, with a top-up of 1.40 reais (US$0.28) per litre running for 30 days alongside the pre-existing 2.12-reais (US$0.42) per-litre subsidy already in place. When both subsidies run at the same time, qualifying imports would draw a combined rate of 3.52 reais for every litre delivered. A cut in wholesale diesel costs does not automatically translate into lower prices at the pump for consumers.

Among the provisions included in the package, ethanol producers stand to receive expanded financial support through higher subsidies, while the existing tax exemption covering ethanol is stretched to cover a broader scope. Officials indicated that windfall oil receipts would absorb the budgetary cost of the gasoline and ethanol measures, while the government's social communication secretariat noted in a statement that keeping import prices workable had become a priority given the strain on fuel supply.

The policy adjustments came as oil markets had been tightening for weeks, a stretch that followed the outbreak of armed conflict involving Iran, Israel, and the United States in late February. Shipping through the Strait of Hormuz — a waterway that carried roughly one-fifth of global oil volumes before hostilities began — has been affected by the ongoing conflict. Refining margins for diesel and petrol in international markets had climbed to more than twice their pre-war levels, according to a government statement, a development that weighed on the cost of fuel domestically.

Although Venezuela ranks among the world's crude oil exporters, its refining network has long struggled to turn out enough processed fuel to meet demand at home. Finance Ministry figures put the share of diesel sourced from overseas at roughly one-third of national consumption. When global prices climb, the cost of bringing goods into a country tends to rise alongside them, placing added strain on household budgets.

Diesel accounts for virtually all the fuel consumed by lorries and other freight vehicles on Brazilian roads, meaning that pump prices carry direct weight for the logistics sector. When diesel becomes harder to afford, the knock-on effect travels along supply chains until it registers in what shoppers pay for food — a pressure point that carries weight for both economic planners and political decision-makers. When truckers walked off the job across Brazil in 2018, the knock-on effects rippled through fuel and food distribution networks nationwide, generating considerable economic losses and drawing attention to what price movements in diesel can set in motion.

With the 25 October presidential runoff drawing near for Lula and Flávio Bolsonaro, the fuel measures were introduced in the lead-up to that contest. Petrol costs and broader affordability concerns drew sustained attention from voters throughout the election period.

Bolsonaro took aim at the government's management of living costs and put forward the view that diesel prices stood to increase once the election had passed. Through media outlets, he put forward the view that Lula had acted without due responsibility, and added that ordinary consumers would end up carrying the financial costs of the government's policy direction. Officials described the intervention as a measure needed to keep fuel flowing at a time when external conditions had been worsening.

Data from the IBGE showed a 0.82% uptick in consumer prices during September, reversing a 0.32% drop recorded the previous month. Over the 12 months ending in September, consumer prices climbed 4.58%, a rate that has been weighing on household budgets as voters head toward the runoff.