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Monday, October 3, 2022

Brazil’s Petrobras to hike fuel prices, infuriating politicians

Brazil's Petrobras to hike fuel prices, infuriating politicians
© Reuters. FILE PHOTO: A worker uses a petrol pump at a Brazilian oil company Petrobras gas station in Brasilia, Brazil March 7, 2022. REUTERS/Adriano Machado/File Photo

By Gabriel Araujo

SAO PAULO (Reuters) -Brazilian motorists will soon pay more at the pump after state-run Petrobras said it plans to hike fuel prices beginning on Saturday as the country grapples with soaring inflation ahead of elections later this year.

The Brazilian oil giant announced the higher prices on Friday, which was quickly met with angry denunciations from leading politicians.

Petroleo Brasileiro SA, as Petrobras is formally known, said diesel prices at its refineries will be raised by more than 14% to 5.61 reais ($1.10) per liter, while gasoline will go up more than 5% to 4.06 reais/liter.

The move represents the first increase for diesel in roughly a month in South America’s biggest economy. Gasoline prices have not risen since early March.

President Jair Bolsonaro, who faces an uphill re-election bid in October’s election, tweeted earlier on Friday that the government, as a shareholder, was against any price hikes, describing Petrobras’ profits as “exaggerated.”

“Petrobras might plunge Brazil into chaos,” he said, citing a 2018 economic downturn caused by a truckers strike over fuel prices.

In his own posts on Twitter (NYSE:TWTR), Lower House Speaker Arthur Lira denounced a “war against Brazil,” and called for CEO Jose Mauro Coelho to resign following Petrobras’ announcement.

Lira, a Bolsonaro ally, added that congressional leaders must meet to reevaluate fuel pricing policy.

Petrobras pegs fuel prices to international energy markets and foreign exchange rates rather than offering subsidies.

Gasoline prices were 28% below international averages, and diesel 19% cheaper, at the end of last week, according to bank Itau BBA.

Defending the price hikes, the oil company said in a statement “it’s necessary for Petrobras to seek convergence with market prices” due to structural changes in the oil market.

($1 = 5.1090 reais)

Source: Investing.com

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