Business & Finance

Reuters reveals changes to Petrobras pricing policy; market reacts

Shares of Petrobras tumbled on Friday after Reuters exclusively reported that Brazil’s state-controlled oil company had expanded its period for calculating international price parity of the fuels it sells from three months to one year.  The new policy, confirmed by Petrobras in a Friday filing, gives it flexibility to keep retail prices low for a longer period, amid a rebound in global crude markets and growing pressure from truckers threatening to strike over higher diesel prices. The extent to which international price swings hit consumers at the Brazilian pump has long been a sensitive issue for Petrobras, which lost about $40 billion between 2011 and 2014 for selling fuel below international parity.

Market Impact

Following the Reuters report, Petrobras shares fell sharply, nearly erasing their 4% gains in Friday’s session and opening more than 1% lower on Monday morning. Analysts at Bradesco BBI and XP Investimentos downgraded their recommendations on Petrobras shares to “Neutral” on Monday, citing the Reuters report and company confirmation, as they highlighted growing risks that its fuel prices will not reflect movements in global markets.

Article Tags
Topics of Interest: Business & Finance
Type: Reuters Best
Sectors: Business & FinanceCommodities & Energy
Regions: Emerging MarketsSouth America
Countries: Brazil
Win Types: Exclusivity
Story Types: Exclusive / Scoop
Media Types: Text
Customer Impact: Major Global Story
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