Recently, Petrobras reached first place among Brazilian companies with the highest profits, becoming the most valuable company not only in the country, but also in all of South America. This week, the state-owned company announced the biggest quarterly gain in the company's history: R$ 44,5 billion. This result was much higher than that of the same period in 2021 (BRL 1,2 billion).

Of all the profit collected in this period, the Union will receive approximately R$ 14 billion, amounts that virtually benefited infrastructure, educational, security projects, among others. However, faced with a scenario of financial difficulties among Brazilians, with the inflation being pulled up a lot due to fuel prices and the discredit of politics, should we celebrate or demonize these results?

As long as oil-derived fuel prices are high, it will be difficult to find anyone who says that Petrobras' profits have concrete benefits for Brazilians. Furthermore, the pre-candidates for the presidency of the Republic have raised their tone by criticizing the state-owned company and its gains, even though the Union is the main shareholder.

President Jair Bolsonaro (PL) classified, during a live broadcast on social networks, that Petrobras' profits as a "rape" and also said that the state-owned company "can no longer increase the price of fuel, this is a crime".

In an interview with Radio Sarandi, from Rio Grande do Sul, Ciro Gomes said that Petrobras is despoiling the Brazilian people and that part of the disclosed profits will go to minority shareholders, which are bankers in Brazil and abroad.

On his official website, Lula also pointed to international shareholders as the only beneficiaries of Petrobras' profits and repeated what he calls "Brazilianizing" the state-owned company's pricing policy, which is not concerned with the fact that it increases the cost of living and makes the Brazilian's life much more difficult.

5 reasons that made Petrobras profits skyrocket

1. overvaluation of oil in the “post-pandemic“: In the first quarter of 2022, oil prices rose by 66% on the world market compared to the same period last year. The rally was further accelerated after the war in ukraine, because Russia, which is the second largest exporter and third largest producer of global oil, accounting for about 12% of global supply, has been suffering from economic sanctions. Due to the pricing policy based on the international price, Petrobras transfers these increases to Brazilians.
2. Production cost X diesel selling price: Price increases have increased the difference between diesel production costs and the fuel's selling price. In March, Petrobras promoted the biggest readjustment since January 2021 (24,9% of S-10 diesel in refineries). The difference favors Petrobras' earnings, not least because diesel accounted for 48% of the state-owned company's sales revenues in the first quarter.
3. More production and more sales abroad: Petrobras extracts pre-salt oil at a cost of US$ 6 per barrel, with the selling price being US$ 101,40 in the quarter. The company increased production in the quarter by another 1%, and exported 55% more compared to the first quarter of 2021.
4. Dollar fall: The dollar fell 15% in the first quarter, contributing to Petrobras' profit, as it helped to reduce the company's debts and other liabilities.
5. Financial investments: Petrobras increased the amount of cash on hand in the first quarter due to increased sales. Therefore, the application of these resources in the financial market brought more profits. A good part of these gains is related to the increase in the Selic interest rate, which reached 11,75% per year at the end of the first quarter.

High oil should maintain Petrobras' profits in the coming months

The tendency is for Petrobras and other publicly traded companies in the sector to continue showing good profits in the coming quarters.

What we see is that oil prices continue to rise, including demand that exceeds supply. The reason still has to do with the European Union's sanctions against Russia regarding the supply of some types of fuel.

According to the person in charge of the Expert Panel of CM Capital, Nicolas Silvas, even with the plan of the Organization of Petroleum Exporting Countries and allies (OPEC+) to maintain small increases in oil production, the drop in inventories tends to lead to a rise in prices.

Other specialists also believe that in the coming months the values ​​of the brent oil they must remain above US$ 100. Another favorable factor for Petrobras would be the payment of dividends. The state-owned company will anticipate earnings for the quarter of R$ 3,17 per share to shareholders who were in the company's database until May 23. Thus, investors will feel motivated.