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Brazilian Petrobras looks to end market-friendly gas pricing


Oil And Gas

Brazilian Petrobras looks to end market-friendly gas pricing

Brazilian President Luiz Inacio Lula Da Silva, in a bid to control inflation announced state-run oil giant Petrobras would end its policy to peg the cost of fuel to international prices.

On May 17, 2023May 16, 2023, Petroleo Brasileiro, also known as Petrobras, said it would change its pricing system, in which domestic fuel prices are linked to the international market, to instead use different “market references”, like the prices of other fuel suppliers.

Oil analysts claimed that the company provided few hints as to what to expect going forward.

The policy appears to be "a way for them to keep prices artificially low," according to Adriano Pires, a renowned Brazilian oil expert who last year declined the position of Petrobras CEO.

The change was mostly anticipated. The 77-year-old Mr. da Silva, a veteran of the left in Latin America who previously served in office from 2003 to 2010, has argued that the government should shield the nation from increases in international fuel prices, particularly in a large country that heavily relies on road transport.

Company shares were up nearly 3% in afternoon trading on the country’s benchmark stock market.

Petrobras served as a platform for governmental economic intervention during previous administrations led by Mr. da Silva's Workers' Party. The company was forced to sell fuel below cost between 2011 and 2016 in order to combat inflation; this policy cost the company about $30 billion and made it the most indebted oil company in the world.


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