Petrobras faces dilemma: readjustment or scarcity

In a scenario of high oil prices on the international market and double-digit inflation in 12 months in Brazil, the fuel readjustment became a dilemma for Petrobras.

On the one hand, if it does not update its prices, importing companies may end up not bringing the most expensive fuel abroad. According to the sector, imports currently account for around 30% of the country’s diesel supply.

The market has already projected that the barrel of oil will reach US$ 130 in the medium term. Some estimates suggest that it could reach $150 by the end of the year, according to a recent Morgan Stanley report.

“With the rise in the exchange rate and in the reference prices of diesel oil and gasoline in the international market, the lag scenarios have moved away from parity, which makes imports unfeasible”, said Abicom (Brazilian Association of Fuel Importers) at the beginning of the week.

In recent interviews, the entity’s president, Sérgio Araújo, has reaffirmed that the risk of scarcity is a concern and is precisely due to the lack of parity between internal and external prices. The lack of adjustments by Petrobras makes importers stop bringing diesel, he says.

On the other hand, the increase to reduce the gap in fuel prices impacts inflation and weighs directly and indirectly on Brazilians’ pockets, at a sensitive time for President Jair Bolsonaro (PL).

He is due to seek re-election in October, and he needs to respond to voters, who see their purchasing power increasingly strangled by inflation.

Fuels have already had a significant impact on rising prices — their weight in the IPCA, the country’s official inflation, reached 8.13% in May, compared to 7.96% in the previous month.

Only gasoline reached 6.81% of the IPCA in May, and in the same period of 2020, this percentage was 4.59%.

Before the increases announced this Friday (17), diesel prices at refineries had not been readjusted since May; gasoline, since March.

The government’s pressure to avoid the readjustments has been great: last Thursday (16), in his weekly live, Bolsonaro said that the state-owned company has “anger” to readjust prices. This Friday, shortly before the announcement of the new increase, the president said that the company would throw the country into chaos.

He also went so far as to say that he would be articulating with the Chamber for the creation of a CPI (Parliamentary Commission of Inquiry) to investigate the president of the state-owned company, José Mauro Ferreira Coelho.

The president of the Chamber, Arthur Lira (PP-AL), is another who has invested against the oil company, even asking for the resignation of the president of Petrobras and saying that he “goes to the wall” to “reverse prices”.