(Adds approval of payment to Petrobras)
RIO DE JANEIRO, Sept 18 (Reuters) - Brazil could face a diesel shortage at the end of 2018 as a result of the government's mispriced subsidy program which has discouraged suppliers, and the state-controlled oil company Petroleo Brasileiro SA may be forced to sell diesel at a loss, broker INTL FCStone said on Tuesday.
Brazil's oil industry regulator ANP said it approved the payment of 871.5 million reais to Petrobras on Tuesday to compensate for the diesel subsidy.
Petrobras Chief Financial Officer Rafael Grisolia had earlier told Reuters on Friday that the firm expected to receive 2 billion reais to 2.5 billion reais ($484 million to $605 million) from ANP within two weeks to make up for subsidies.
Earlier this year, a nationwide truckers' protest over rising diesel prices paralyzed Latin America's largest economy and forced the government to lower diesel prices through tax cuts and subsidies.
But the subsidy program announced in May has set prices too low to compensate most diesel importers, FCStone said in a statement.
Companies have stopped selling the fuel, forcing Petrobras to supply most of the market at a loss and raising the specter of a shortage in the coming months, the commodity broker added.
"Private imports are paralyzed, and Petrobras is practically the only agent bringing the product to Brazil," FCStone said.
"Unless oil regulator ANP raises diesel prices and starts paying subsidies, we will have diesel shortages in the last months of the year or Petrobras will have to face the cost alone of supplying the whole market at a loss," FCStone said.
The subsidy plan ended the truckers' strike but it raised the specter of a new and costly round of state meddling in the affairs of Petrobras, still the world's most indebted oil company.
Brazil will need to import some 5.5 million cubic meters of diesel in the last four months of the year, a 12 percent increase over the same period last year, FCStone said.
The growing need comes after an explosion in August at Replan, Petrobras' largest refinery, hurt output and as a thriving agriculture industry drives demand higher.
($1 = 4.1319 reais) (Reporting by Alexandra Alper Editing by Clive McKeef)