Petrobras Freight Changes Will Not Significantly Affect Fuel Prices and May Hinder Oil Exports, According to Ineep Experts

Written by Ruth Rodrigues

Published on 19/05/2022 at 12:41

Updated on 20/05/2022 at 13:18

Foto: André Motta de Souza/Agência Petrobras

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With a Possible Change in Petrobras Freight Rules, the Fuel Market Begins to Analyze Possible Scenarios and, in All of Them, the Change Should Hinder Oil Exports and Will Not Have a Significant Effect on Final Fuel Prices

The Brazilian oil and gas market is starting to analyze possible scenarios if Petrobras makes a change to the calculation of fuel freight prices. And as of this Thursday (05/19), although it is not possible to project with certainty the impacts of the decision, the change in calculation may bring strong difficulties for oil exports and will not have a significant effect on reducing final fuel prices.

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Petrobras Analyzes Proposal for Change in the Calculation of Fuel Freight, but the Impact of the Decision on Final Prices Will Be Minimal

Petrobras currently uses the freight calculation method known as CIF (cost, insurance, and freight), where the seller pays the expenses until the product is loaded onto the ship. Now, the state-owned company is analyzing changing this calculation to the known FOB (free on board), where the buyer assumes all risks and costs in transport throughout the supply chain.

Thus, many experts in the oil and gas field are analyzing the possible impacts of the decision, which aims to reduce fuel prices in Brazil, and the forecasts are not very positive. Petrobras’s initial idea with the change is to use the export prices of oil produced by the state-owned company as a basis for the prices of fuels sold to distributors at refineries. This is because the current policy is based on the import of fuels for the calculation.

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Change in State-Owned Fuel Freight May Create Difficulties in Oil Export with the International Oil and Gas Market

In addition to the minimal change in final fuel prices for Brazilian consumers, the change in Petrobras’s freight calculation could also hinder oil exports. This happens because, with the new calculation for freight, companies would need to bear much higher costs throughout the transportation chain and, therefore, may seek new international suppliers. Thus, the state-owned company could lose a significant range of clients if it adopts the changes currently being analyzed.

In this way, Ativa Investimentos analyst Ilan Arbetman remarked that this is not the best alternative to currently reduce fuel prices and warned about the situation of oil exports. He also recalled that “It is not easy to change commercial conditions with large buyers. There is a risk that the client may seek competitors, looking for better conditions.”

Finally, the executive president of the Brazilian Foreign Trade Association (AEB), José Augusto de Castro, believes that the decision will bring advantages and states that the cost of the product imported under CIF tends to be higher than that of FOB, following the idea of a complete purchase of services. Now, experts and companies in the oil and gas sector in Brazil are awaiting a possible decision from the state-owned company over the coming months.

Petrobras Freight Changes Will Not Significantly Affect Fuel Prices and May Hinder Oil Exports, According to Ineep Experts

With a Possible Change in Petrobras Freight Rules, the Fuel Market Begins to Analyze Possible Scenarios and, in All of Them, the Change Should Hinder Oil Exports and Will Not Have a Significant Effect on Final Fuel Prices

Petrobras Analyzes Proposal for Change in the Calculation of Fuel Freight, but the Impact of the Decision on Final Prices Will Be Minimal

Change in State-Owned Fuel Freight May Create Difficulties in Oil Export with the International Oil and Gas Market

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Petrobras Freight Changes Will Not Significantly Affect Fuel Prices and May Hinder Oil Exports, According to Ineep Experts

With a Possible Change in Petrobras Freight Rules, the Fuel Market Begins to Analyze Possible Scenarios and, in All of Them, the Change Should Hinder Oil Exports and Will Not Have a Significant Effect on Final Fuel Prices

Petrobras Analyzes Proposal for Change in the Calculation of Fuel Freight, but the Impact of the Decision on Final Prices Will Be Minimal

Change in State-Owned Fuel Freight May Create Difficulties in Oil Export with the International Oil and Gas Market

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