High International Oil Prices Contribute to Strong Over 80% Valuation of Petrobras Shares

The Increase In Oil Prices May Be Related To The Rebound Of Economic Activities Post-Pandemic And The War In Ukraine, Causing A Considerable Increase In Petrobras Stock

Since the rebound of economic activities after the Covid-19 pandemic and the beginning of the war in Ukraine, there has been a noticeable increase in oil prices in the international market. As a result, the shares of Petrobras also experienced a considerable increase.

According to CNN Brasil, on July 26, 2021, the company’s preferred shares (PETR4) were trading at R$ 18.61. As of last Friday (29), one day after the company announced a profit of R$ 54.3 billion for the second quarter of this year, the value of such shares was R$ 34.15, representing an increase of 83.5%.

The ordinary shares (PETR3), in turn, saw an even more significant increase during this period, of 90%. Their value rose from R$ 19.45 to R$ 36.96.

Bruno Imaizumi Associates The Post-Pandemic Scenario With The Increase In Oil Prices In The International Market

According to the analysis by Bruno Imaizumi of LCA Consultores, the appreciation of oil began with the recovery of economic activity after the Covid-19 pandemic passed its most critical period.

Imaizumi explained that, in July 2021, vaccinations began, allowing individuals to feel safer about returning to circulation, leading to increased global demand for oil. Therefore, he stated, oil prices began to rise, along with fuel sales, which resulted in increased stock prices for Petrobras.

Last week, Brent crude oil, which is typically used by Petrobras, closed at US$ 110, representing an increase of 2.68%. This phenomenon is linked to expectations of reduced global supply, given the ongoing conflict in Eastern Europe and reports of lower production in June by the Organization of the Petroleum Exporting Countries and Allies (OPEC+).

Joelson Sampaio, an economist and professor at Fundação Getúlio Vargas (FGV), believes that the commodity price should continue to rise throughout the year, which will further contribute to the appreciation of the state-owned company.

Adriano Pires Assesses The Appreciation Of Petrobras And Also Relates It To The Import Parity Price Policy

Adriano Pires, director of the Brazilian Center for Infrastructure (CBIE), who was nominated for the presidency of Petrobras this year, believes that another contributing factor to the increase in the company’s value was the maintenance of the import parity pricing policy.

Furthermore, the high prices of derivatives like gasoline and diesel contributed to Petrobras achieving a profit of R$ 54.3 billion in the second quarter of this year.

Pires also highlights that the reduction of Petrobras’ debt, which decreased by 9% compared to the first quarter and is now at US$ 53.6 billion, demonstrates the state-owned company’s ability to recover.

Thus, in light of this scenario and the record value of dividends announced at R$ 87.8 billion, the shares have become attractive to the market.

From this perspective, the CBIE director believes that the shares, if excluding the political effects of Petrobras being a state-owned company, could be even more valued. Pires stated that the company operates in a capital-intensive sector that requires significant investments; however, there is discontinuity in its management. This is because, every four to eight years, the majority shareholder—who is the government—is changed, which ends up affecting the company.