Jean Paul Prates, the chief executive at Brazil’s state-controlled oil giant Petrobras, issued on Tuesday a statement about the recent fluctuations in oil prices following Hamas’s Saturday attacks against Israel.
Mr. Prates emphasized that Petrobras is closely monitoring the situation and taking necessary steps to manage it without incurring losses. He also indicated a willingness to make adjustments if deemed necessary.
“In times of conflict, we can expect increased volatility, with highly speculative price variations. This situation will serve as a test of the effectiveness of our current pricing policy,” Mr. Prates said at an event in Rio de Janeiro.
He further stated that the company’s pricing policy has the capacity to partially mitigate the impact of the ongoing conflict.
Between 2016 and May of this year, Petrobras had pegged fuel prices in refineries to international fluctuations. The international import parity was replaced with a “commercial strategy” that prioritizes the “customers’ alternative cost” and the company’s “marginal value” in each negotiation.
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 the Luiz Inácio Lula da Silva administration to change the company’s strategic plan and stop its divestment in refineries. The Lula administration is trying to recover the company’s monopoly role through market lanes.
Regarding current oil shocks, Mr. Prates stressed that Petrobras is already taking appropriate measures, primarily in monitoring diesel prices and adapting its strategies accordingly. He assured that if adjustments are warranted, the company is prepared to make them promptly.
The International Monetary Fund’s chief economist, Pierre-Olivier Gourinchas, said it’s too early to assess whether this jump will be sustained.
In August, Petrobras made its first price hike after changing its pricing parity policy. The raise was already expected, as gasoline and diesel prices had been below international parity for months. According to a report by XP Research at the time, the average price of gasoline sold at the company’s refineries was 45 percent (or BRL 1.15) below international benchmarks, while diesel prices were 31 percent (BRL 0.95) below international references.
The Brazilian Association of Fuel Importers says the average prices for diesel and gasoline remain below international levels — by 7 and 1 percent, respectively.
Search
