Brazil will scrap part of the diesel subsidy, which was launched this year, to limit the impacts of higher global oil prices, Finance Minister Dario Durigan said on Tuesday.
Brazil is going to cut a subsidy of 0.35 reais ($0.068) per liter from July, Durigan told journalists in Brasilia.
The administration of President Luiz Inacio Lula da Silva, who is expected to seek reelection in October, unveiled a series of fuel subsidies earlier this year to cushion the impact of higher global oil prices from the U.S.-Israeli .
Brent crude now remains above pre-war levels but has fallen significantly from its peak, creating room for the move, Durigan said.
The government had pledged not to keep fuel prices artificially low, and said that other fuel subsidies, including on diesel and gasoline, remain in place for now, but are being reevaluated as oil prices ease.
A 12% tax on crude oil exports announced in March was also being reassessed, he said.
Planning Minister Bruno Moretti said at the same press conference that the government has already committed about 16 billion reais ($3.09 billion) in subsidies up to now to offset the impact of the war for consumers, noting that the figures are still being refined.
Since Latin America's largest economy is a net oil exporter, the government had also estimated that the conflict would also boost public revenues.
The Finance Ministry's executive secretary, Rogerio Ceron, said at the same briefing that, taking into account windfall revenues and additional spending linked to the conflict, the overall fiscal impact has been roughly neutral so far.
($1 = 5.1697 reais)