Brazil diesel prices cut in effort to halt strike

Protests along the highway BR-040 in Duque de Caxias Brazil

Protests along the highway BR-040 in Duque de Caxias Brazil

Brazil's oil regulator ANP said once roads are completely cleared, it would still take a week to normalize fuel supplies countrywide.

But it wasn't immediately clear how numerous thousands of drivers, who by the nature of their jobs operate with a good bit of independence, would heed calls to stop the strike and unblock roads.

Luiz Antonio, a trucker who was striking outside of Rio de Janeiro on Friday, said he did not trust what had been negotiated in Brasilia.

Roberto said he filled up four days ago, but his tank was nearly empty.

But the determination of the truckers has caught center-right President Michel Temer's government flat-footed, five months ahead of presidential elections. Moving against the truckers, however, could lead to violence and wouldn't solve the larger problems of getting vehicles off the roads and getting drivers back to work.

Consumers reported shortages of vegetables in several cities and the prices of the perishables have risen significantly. Many vendors at the market were charging double, saying they had to pay more to buy what they could.

The Brazilian Association of Meat Industry Exporters said dozens of meatpacking plants were idling because of the strike, and 1,200 containers carrying beef for export were not being loaded on ships each day.

Lorries parked during a strike in Brasilia
Lorries parked during a strike in Brasilia

Petrobras (PBR -16%) plunges after announcing it will temporarily cut diesel prices in Brazil in an attempt to placate 200K-plus truckers whose strike over rising fuel costs threatens to create food shortages and wreak havoc on the country's exports.

The airport in the capital Brasilia faced possible paralysis, long lines formed at gas stations that were running dangerously low on fuel, and even exports were affected.

Brasilia, which is in the middle of the country, has been particularly hard hit because it gets fuel from lorries coming from the coast. But many truckers balked, saying they did not feel represented and did not trust the government to follow through on promises.

During that period, the government said it would subsidise fuel prices by lowering several taxes. The company that manages the facility, Inframerica, said Wednesday that "only aircraft capable of taking off without needing to refuel will (be allowed to) land at Brasilia Airport".

The deal puts a temporary hold on a nationwide truck drivers' strike that had paralyzed swathes of South America's largest economy.

Significantly lowering the price would require steep cuts in taxes, particularly hard at a time when many states, such as Rio de Janeiro, have their own fiscal crises.

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