Petrobras Is Cornered By OPEC+ With New Oil Hike, And New Fuel Price Adjustments Will Be Inevitable

With OPEC+’s Decision And Rising Oil Prices, Petrobras’ Fuel Adjustments Will ‘Hurt’ Brazilians’ Pockets

After an adjustment in the price of Petrobras fuel in Brazil, due to the rising price of oil abroad, the fuel would need an increase of 8%, or 0.22 reais per liter, to match the import prices, according to the Abicom (Brazilian Association of Fuel Importers) and OPEC+. It is expected that by Wednesday (4) there would be a shortfall of 4% for the oil derivative.

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Adjustment in Fuel Prices and Petrobras’ Increase

The price adjustment of oil occurred after producers from the Organization of the Petroleum Exporting Countries (OPEC+) and their partners reached a common agreement to extend most production cuts until April, after the evaluative committee found that the recovery in demand from the pandemic is still very fragile.

“With OPEC+’s decision made in today’s meeting to maintain production and oil supply cuts, commodity prices have risen around 3%, increasing price shortfalls in the national market,” said Abicom president, Sérgio Araújo.

“As a result, a new announcement of an increase in diesel and gasoline prices is expected for tomorrow.”, Sérgio added.

Oil Closing

Brent crude oil, the international benchmark, closed up 4.17%, at $66.74 per barrel. Meanwhile, oil in the United States rose 4.16%, to $63.83 per barrel.

Petrobras’ fuel prices prioritize keeping up with import parity, according to calculations that consider oil prices and exchange rates, along with other indicators.

Conflicts That Caused Losses

Due to various disagreements between President Jair Bolsonaro and state-owned CEO Roberto Castello Branco, a recent escalation in oil prices abroad, and the transfer of amounts made by Petrobras for products that were most sold to distributors ultimately came to an end. Bolsonaro decided not to renew Castello Branco’s contract, concluding on March 20.

Fuels

Even though fuel prices in Brazil are impacted, they are influenced not only by Petrobras’ adjustments, the prices at some gas stations across the country remain steady. Gas stations in the country entered February with the highest adjustment mark, exceeding R$ 5.00. Diesel, on the other hand, hit R$ 4.00 per liter.