Starting tomorrow, gasoline and diesel prices at Petrobras’ refineries will increase by 16.27 percent (BRL 0.41 per liter) and 25.82 percent (BRL 0.78 per liter), respectively. It is the first price hike after the state-run oil company changed its pricing parity policy, previously linked to international rate variations.
The raise was already expected as gasoline and diesel prices were below international parity for months. According to a report by XP Research, the average price of gasoline sold at the company’s refineries was 45 percent (or BRL 1.15) below international quotations, while diesel prices were 31 percent (BRL 0.95) below international references.
To soften the blow, the company pointed out in a statement that the price of gasoline still accumulates a reduction of BRL 0.15 per liter in the year. If, until June, Brent barrel quotations varied between USD 70 to USD 75, allowing Petrobras to lower prices, the reduction in oil supply changed the scenario. The barrel is now sold at USD 88, and its price only tends to rise.
Petrobras announced it was changing its fuel pricing policy in May, replacing international import parity with a “commercial strategy” that prioritizes the “customers’ alternative cost” and the company’s “marginal value” in each negotiation — a change explained by Petrobras’ CEO, Jean Paul Prates, as “opportunity cost logic.”
Far from a precise formula, what analysts read between the lines of these explanations was that the company that controls 84 percent of the country’s refining capacity is willing to drown its already fierce competition and sacrifice short-term and regional margins to win new customers, and grow in the long term.
As we showed months ago, the new pricing policy is part of a broader plan by President Luiz Inácio Lula da Silva’s appointee, Mr. Prates, and the company’s new board of directors to change the company’s strategic plan and stop its divestment in refineries. The Lula administration is trying to return the state-controlled oil giant to its monopoly role through market lanes.
Following this change of spirit in Petrobras, the company announced in early August that it would pay USD 3 billion to shareholders in Q2, in line with its new dividend policy, which consists of distributing 45 percent of its free cash flow to shareholders, down from the 60 percent earmarked under the former Jair Bolsonaro administration. Payments will continue to be made every quarter.
At first, the market seemed receptive to all these changes. Petrobras shares soared more than 4 percent at the opening of today’s trading session. By 11 am, the company’s common and preferred shares were up 2.91 percent and 3.19 percent, respectively, at BRL 34.61 and BRL 31.62.
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