Brazil’s Petrobras Announces Hikes in Fuel Prices

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Brazil’s oil giant, Petrobras, announced on Monday (December 5th) night, it was increasing the prices of gasoline and diesel at its refineries. The increase, scheduled to take effect on Tuesday, December 6th, will be of 9.5 percent for diesel and 8.1 percent for gasoline.

“The main variables that explain the executive group’s decision are the noted increase in oil and oil product prices and the recent devaluation of the exchange rate,” said the statement released by the company on Monday.

Although the oil company says the increase in refinery prices may or may not be reflected in the final consumer price, economists say that it is likely that at the pumps gasoline will increase by R$0.12 per liter (3.4 percent) while diesel is expected to increase by R$0.17 per liter (5.5 percent).

In October, the company announced its new fuel price policy, with Petrobras, company executives expected to review fuel prices every thirty days to be able to cope with variables whose volatility has been increasing recently. According to the new policy, Petrobras will take into consideration the international parity price (IPP), the margin for additional compensation for risks inherent in the operation and market participation level when establishing prices of the fuels at its refineries.

“This committee will decide whether to make the adjustments of cutting, raising, lowering or maintaining prices,” said Petrobras CEO Pedro Parente at the time.

The announcement in October and then in November of reductions in the prices of gasoline and diesel at Petrobras’ refineries did not lead to reductions of these fuels at gas stations.