Petrobras cuts diesel prices for the second time in a week

Oil and gas giant Petrobras announced a 4-percent reduction in diesel prices for fuel distributors, effective from Friday. It is the company’s second cut in a week and, due to its massive market share, will have a significant impact on prices at the pump. 

Last Thursday, the state-controlled company already reduced diesel prices by 3.6 percent.

As a result of government-led measures to cap state-level fuel taxes, the cost of gasoline has gone down by 22 percent since late June — while ethanol has gotten 13. 5 percent less expensive. Diesel prices, however, have not followed the trend, down just 2 percent over the same span.

According to Petrobras, reference prices on the international market have stabilized at a lower level for diesel, which has allowed it to lower its prices for refineries. Indeed, benchmark prices for energy are falling in commodities markets, with Brent oil prices down by 14 percent since June 27. 

Abicom, an association of Brazilian fuel importers, says there is room for more cuts. Domestic costs of diesel were 13 percent higher in Brazil than the international average as of Thursday morning.

At the end of last month, Petrobras signaled that it would not make major cuts to the price of diesel in the short term, given global supply issues and the proximity of winter in the northern hemisphere. 

Indeed, analysts point out that persistent uncertainties about global supply could preclude bolder price cuts until the end of the year.

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