Petrobras Loses R$14 Billion in Two Hours With Government Intervention in Diesel Prices

The Drop of More Than 5% in Petrobras Shares This Morning, April 12, Caused the State-Owned Company to Lose 14 Billion Reais in Market Value in Less Than Two Hours of Trading. The Company Announced a Diesel Price Adjustment but Backtracked Due to a Request from President Jair Bolsonaro.

Petrobras shares were down 0.12% this Friday morning, with the main stock indicator reaching 94 thousand points. The company’s shares were negative highlights of the trading session, and around 11:30 AM, the stocks were down about 5%. Since the market opened, Petrobras has lost approximately 14 billion reais in market value. Yesterday, the state-owned company was valued at 390 billion reais and is now valued at 376 billion reais.

Last night, Petrobras announced a 5.7% diesel price adjustment, and hours later, it reversed the decision. The company’s choice to review the adjustment at the refineries was the explanation for this significant loss. The adjustment would be the first in 20 days, within the company’s policy to soften the impact of rising product prices abroad to avoid affecting domestic prices and to prevent another confrontation with truck drivers. The drivers have threatened to block roads again after prices began to recover abroad.

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The state-owned company issued a statement to the market explaining that it assessed and saw that there was room to delay the adjustment for a few more days, but the decision was viewed as a possible intervention by the Jair Bolsonaro government in the company’s pricing policy.

On Thursday, the 11th, Bolsonaro managed to contain an immediate crisis that could have been explosive. Last year’s truck drivers’ strike weakened the Michel Temer government irreversibly. The government fears that a similar two-week shutdown could occur as it did last year. The decision contradicted Petrobras’s pricing policy, indicating a shock to the autonomy of the state-owned company’s prices.

The expectation is that the state-owned company’s shares will resume trading on the B3 today with a strong drop, reflecting the decline abroad, Spyer states. “A relief for the stock may come from a 1.4% increase in oil prices abroad,” he notes.

However, the overall stock market scenario is also not positive, given the heavy climate in the political sphere and new confrontations between the government and the centrão, which threatens to delay the voting of the pension reform project in the House’s Constitution and Justice Commission (CCJ), initially scheduled for next week. “Delays in the processing of the reform may occur, bringing discomfort to the government and instability to the markets, which is expected to lead to a more negative opening of the Bovespa Index, a movement intensified by Petrobras, and an increase in country risk abroad today,” Spyer states.

The suspension of the Petrobras adjustment at the government’s request will negatively impact domestic markets.

The National Energy Policy Council (CNPE) announced, on 04/09, the approval of a Resolution establishing the Committee for the Promotion of Competition in the Natural Gas Market in Brazil.