Brazil’s energy story during the Iran war’s early weeks is not about closing itself off from global oil markets; it is about buffering the impact in the part of the fuel economy most visible to motorists. As the conflict rattled oil markets and pushed prices higher elsewhere, Brazil’s long-running program allows a large share of drivers to choose at gas stations between pure sugarcane ethanol and gasoline blended with 30% biofuel.
The system works on a scale that sets Brazil apart. The country has a “dual-fuel fleet” made up of vehicles capable of running on any combination of ethanol and gasoline, a program launched in 1975 during Brazil’s military dictatorship and later carried into democratic governance. In the Associated Press report, the arrangement is described as helping reduce reliance on foreign oil by giving the domestic biofuels sector room to operate alongside conventional fuel.
UNICA President Evandro Gussi framed that flexibility as a practical defense against shocks that can disrupt supply and pricing in other countries. “Brazil is much better prepared than most countries because it has a viable alternative of this nature,” he said, describing how the biofuels option changes the leverage oil markets can have over day-to-day consumption.
The report ties Brazil’s relative gasoline stability in March to that domestic industry maturity. It said Brazilian gasoline prices rose about 5% in March, compared with a roughly 30% increase in the United States, with analysts attributing some of that resilience to a mature domestic biofuels market that can withstand geopolitical disruptions with less risk of fuel shortages.
The near-term production outlook also strengthens the buffer. Brazil’s next sugarcane harvest is expected to begin in the first half of April, and the report says it is forecast to produce a record 30 billion liters of ethanol—4 billion liters more than last year. Gussi said in the report that the increase “alone is equivalent to the total amount of gasoline Brazil imported in all of last year,” underscoring the scale of ethanol growth relative to imports of refined fuel.
Underlying the fleet and the supply is a broader effort that includes industrial production, smaller farms, and government-backed research. The report describes how production in Brazil involves both large “mega-farms” and family operations, and it points to research centers such as the Science Development Center for Ethanol at the Unicamp university in Campinas. Coordinator Luis Cortez said Brazil’s program gives flexibility “in ethanol production, in vehicle engines and from the federal government,” adding that the government sets the ethanol percentage in fuel blends. “We have flexibility at three levels,” Cortez said, arguing that research investment carries forward to fuel choices at gas stations.
The climate impact of biofuels, however, remains more complicated than the marketing promise of “cleaner” fuel. The report notes that burning biofuels generally emits less carbon dioxide than diesel, oil and gas, but it also says whether biofuels are overall more sustainable is an open question because land-use changes and production methods can negate some of the gains tied to tailpipe emissions.
Even with gasoline buffered by ethanol, Brazil is still exposed to global oil prices through diesel. The report says diesel prices surged by more than 20% in March and that President Luiz Inácio Lula da Silva proposed import subsidies through May in response. It also describes how diesel relies on imported crude oil and has a smaller biofuel component—because biodiesel, made mostly from soybeans, makes up about 14% of the diesel blend, rather than the 30% biofuel share used in gasoline blends—leaving Brazil more vulnerable if crude markets remain pressured.
For the report’s account, the diesel pressure has immediate economic and political stakes. Government estimates cited said Brazil must buy between 20% and 30% of its diesel each month, most of it coming from Russia, and the report said Brazil imported almost 17 billion liters of diesel last year. With an October election underway for Lula, the report said stabilizing diesel prices is important to prevent truck driver strikes and to keep food inflation in check.