Oil has the highest increase since April and puts pressure on Petrobras – 07/12/2023 – Market

At a time of 12-month inflation retreat to 2020 levels, the rise in oil prices is once again threatening the consumer’s pocket and putting pressure on Petrobras’ management, less than two weeks after the questioned reduction in the price of gasoline.

This Wednesday (12), the price of Brent oil hit US$ 80 per barrel for the first time since April. The barrel closed the trading session at US$ 80.11, in view of expectations of interruption of the cycle of raising interest rates in the United States after good data on inflation.

Experts believe that the bullish scenario can be maintained, driven by prospects of increased consumption and the continued production cuts in OPEC countries (Organization of Petroleum Exporting Countries).

The high reinforces questions about Petrobras’ new pricing strategy, which abandoned the concept of import parity, known as PPI, and has been practicing prices below the international market since May.

At the opening of this Wednesday’s trading session, the gaps between the domestic prices of gasoline and diesel and the international parity reached levels last observed at the end of January, when the state-owned company promoted the last price increase.

According to calculations by Abicom (Brazilian Association of Fuel Importers), the average price of gasoline at Brazilian refineries is now R$ 0.44 per liter cheaper than the import parity. For diesel, the difference is R$ 0.41 per liter.

Considering only the Petrobras refineries, the difference is even greater: R$ 0.46 per liter for gasoline and R$ 0.43 per liter for diesel. In the case of gasoline, the lag reached this level in early July, shortly after the last cut promoted by the state-owned company. In diesel, it is the highest since January.

The cut of R$ 0.14 per liter, announced the day before the full resumption of federal tax collection, brought down the company’s market value, in the face of doubts about government interference in the management of fuel prices.

The drop in refineries, which partially offset the increase in taxes, had been anticipated by the Minister of Finance, Fernando Haddad, in May, as a strategy to reduce the impact on consumers and inflation.

Petrobras denied any agreement with the government, but lowered gasoline on the eve of the increase in ICMS on fuel and, later, on the eve of the resumption of federal taxes.

The maintenance of internal prices in a high oil scenario is considered one of the main risks for investors in the company in a report released this Wednesday by the Goldman Sachs bank.

“Fuel prices significantly below international quotations may discourage other companies from importing the necessary volumes to supply the market”, wrote analysts Bruno Amorim, João Frizo and Guilherme Costa Martins.

Thus, Petrobras could be obliged to guarantee the supply alone, with the risk of losses due to the sale of products below cost price, as occurred during the Dilma Rousseff government.

They calculate that, with Brent at US$ 80 per barrel and gasoline and diesel at current prices, for example, the company’s refining area has a negative Ebitda of US$ 1.2 per barrel. With Brent at US$85, the loss rises to US$4.5 per barrel.

Analysts consider, however, that the state-owned company benefits from high oil prices as it is a large producer, which more than compensates for losses in the sale of fuel below international prices.

With Reuters