Petrobras resists calls to lower fuel prices

Petrobras resists calls to lower fuel prices

Sao Paulo, 18 March (Argus) — Brazil's Petrobras is pushing back against pressure from Brasilia to rethink its 11 March wholesale price increase for gasoline, diesel and LPG, a stance that could further isolate the state-controlled firm's chief executive Joaquim Silva e Luna.

Brazilian president Jair Bolsonaro and other political leaders from across the spectrum had already criticized Petrobras' increase of wholesale gasoline prices in January, even before the Russian conflict in Ukraine sent commodities prices even higher. Pressure has only grown since Petrobras lifted gasoline prices by around 19pc and diesel by 25pc last week.

"Values applied at the time, although relevant, reflect only part of the rise in international oil prices levels, which were heavily impacted by limited supply and increased global demand for energy," Petrobras said today.

The company's market-based pricing policy is guided by import price parity, but changes from external shocks are not immediately passed on. Last week's price adjustment was the first since mid-January and failed to fully reflect global price increases that preceded the 24 February start of the conflict in Ukraine, according to analysts.

When global crude prices edged lower and the domestic currency strengthened against the US dollar early this week, politicians called for a