Future President of Petrobras Will Face Major Crisis in the Oil Sector, Affecting Fuel Prices Like Gasoline and Diesel

Paes de Andrade Will Assume Petrobras During Global Oil Sector Crisis, Thus Having to Deal With Rising Fuel Prices

Caio Mário Paes de Andrade – future president of Petrobras – will have to manage the company amid the largest global oil sector crisis faced in recent years.
The price of oil reached its highest level in 14 years, which may be related to the war in Ukraine and the sanctions imposed on Russia, which caused a profound rearrangement in this sector.
In this context, there is a growing competition for LNG (liquefied natural gas) and diesel in the global market. Liquefied gas is a substitute for natural gas, representing an alternative for European countries trying to reduce their dependence on Russia regarding the latter.
Several countries around the world have established tax cuts or provided subsidies to consumers in order to mitigate the impacts on prices of petroleum-derived fuels.

New Petrobras President Has No Previous Experience in the Oil Sector

Paes de Andrade has no prior experience in the oil sector, which goes against the State-Owned Enterprises Law and may prevent him from assuming the presidency. In his LinkedIn profile, he presents himself as a specialist in mergers and acquisitions, real estate, and digital transformation.
Under his management, Petrobras will face unprecedented challenges for fuel prices, such as gasoline, gas, and diesel.
Regarding gasoline, the difference between the prices applied in the domestic market and the international quotations increased in the last two weeks and already reached 15%, according to an internal analysis by Petrobras. Thus, a new adjustment in fuel prices should be imminent.
According to information from Abicom – an association that brings together fuel importers -, the gasoline deficit reached close to 20% in Brazil over the past two weeks. This Monday, the difference corresponded to 8% per liter.
The last adjustment applied to gasoline by Petrobras occurred on March 11, when the refinery price was altered from R$ 3.25 to R$ 3.86. At the pumps, prices have remained at record levels, with the average price per liter at R$ 7.27.

Amidst the Crisis, Diesel Faces Risk of Shortage in the Second Quarter

As for diesel prices, they are currently in line with the international market. However, if there is no clear indication that Petrobras will maintain parity with external prices, there is a risk of diesel shortage in the second quarter.
In a document submitted by Petrobras to the Ministry of Mines and Energy this month, the company warns about the peak demand for diesel in the USA and Brazil, which coincides with the Brazilian harvest, between August and October.
The document states that, without indication that market prices will be maintained going forward, there is a real danger of diesel shortage during the peak demand period, which corresponds to the harvest, affecting Brazil’s GDP.
After American refineries diverted part of their production to supply European countries, which are looking to reduce their dependence on Russian gas, Petrobras is already increasing its diesel purchases from farther locations, such as India and West Africa.
Finally, just like diesel, gas is also increasingly contested in the global market, due to sanctions imposed on Russia from the war in Ukraine.
Additionally, in Brazil, this scenario is further complicated by an additional issue. Bolivia has reduced gas sales from its state-owned YPFB to the Brazilian market after Argentina offered a better price for the product. As such, the delivery of fuel to the country has been reduced by 30%, equivalent to about 5 million cubic meters per day.

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