Petrobras shares plummet in NY with change of president

Petrobras shares on the New York Stock Exchange plunged close to 12% premarket to $14.36 after President Jair Bolsonaro again replaced the state-owned company’s president, the second change in leadership in two months.

José Mauro Ferreira Coelho is the third Petrobras CEO fired by Bolsonaro because of fuel prices, which has raised analysts’ concern about government interference in the company.

Caio Mario Paes de Andrade, a senior official at the Ministry of Economy, was appointed to replace Coelho.

The firing came after the company refused to sell fuel at a discount to consumers, warning that doing so would lead to a shortage of diesel, Reuters has learned.

Petrobras shares are on track to record their worst session since February 2021, when they fell 21% after then-CEO Roberto Castello Branco was ousted.

The state-owned shares accumulate a high of 48% this year.

Investors will likely see the move as a direct intervention related to the price of fuel in Brazil, JPMorgan said in a note to the market.

“Mr. Coelho had passed on an increase in the price of diesel in his 40 days in office. We expect a negative reaction to the announcement of Petrobras’ shares,” he added.

According to BTG Pactual, “although Petrobras’ corporate governance has so far avoided more direct interference, we fear that the real test is yet to come.”

“Ultimately, we think that the new CEO faces a difficult dilemma: how to preserve his own job following company policies and without compromising the availability of fuel in Brazil?”, said BTG Pactual.

The bank stressed that it is important to follow domestic prices at import parity “to maintain a healthy supply of fuel for the country, which depends on imports and whose supply is sufficient to meet demand.”

For Citi, the change “creates risk around continuity” of Petrobras’ long-term strategy.

With additional reporting by André Romani and Roberto Samora