Brazil's Petrobras to auction 20 MM liters of diesel amid shortage reports
Brazilian state-run oil company Petrobras plans to hold an auction to sell 20 MM liters (l) of diesel in the southern Rio Grande do Sul state amid reports of shortages, two sources familiar with the issue said on Tuesday.
The auction will take place on Wednesday, they said.
A spike in diesel prices is emerging as the first and most immediate threat to Brazil's farm sector from the U.S.-Israeli attacks on Iran, raising costs for producers harvesting a record soybean crop and planting corn they cannot afford to delay.
Although Petrobras, which accounts for most of Brazil's supply, has not changed its prices, there has been a hike in diesel prices domestically since some of the fuel is imported or produced by local refineries that follow global oil prices.
One of the sources, who spoke on condition of anonymity, said the fuel pickup was scheduled to begin this coming Monday, adding the initiative was necessary to "try to calm market nerves."
Media reported on Monday Petrobras had been refusing to release additional volumes of diesel to distributors after its prices reached a record discount to international benchmarks.
Petrobras fears supplying the fuel at a lower price only for distributors to store it and make a profit when the state-run firm raises prices. An auction would create competition and prevent this situation.
"The auction is a way to sell product at higher/different prices," the source said. "It doesn't impact all the volume sold, but it partially covers the gap with the international market."
In a statement, Petrobras said such auctions are a "practice provided for in contracts signed with distributors, with the aim of supplementing regular supply or capturing opportunities through the sale of additional volumes."
It did not explicitly confirm an auction or provide further details.
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