Petrobras monitors tension in Ukraine, says president

Petrobras is monitoring the tension between Russia and Ukraine, which comes at a bullish moment for the oil market, also driven by strong global demand and insufficient supply, the state’s president, reserve general Joaquim Silva e Luna, told Reuters.

The executive also said that he considers a war unlikely, and that a stabilization of tensions has the potential to cool the market, something that is also taken into account by the company before any movement on derivatives prices.

For the year, Brent oil, a global benchmark, has surpassed 20%, and the commodity renewed a maximum since 2014 on Monday, in the face of the threat of war between Ukraine and Russia, one of the largest global producers of oil and gas.

“We are experiencing a period of low OPEC stock, excess demand over supply and a resumption of the economy much higher than what the world expects in the post-pandemic” evaluated Luna this Monday.

“There was still a strong cold in the United States that generated great consumption, all this low stock, greater demand and insufficient supply. I think it could not (come this tension at a worse time)”, added the Executive.

Petrobras adopts a price parity policy for oil derivatives in the domestic market, in relation to international values, which also considers factors such as the exchange rate.

Rising oil always puts pressure on pricing policy.

In recent weeks, however, the dollar lost strength against the real, which in a way “compensated” the pressure that comes from the barrel of oil.

If Brent rose more than 20% in the year, the dollar fell by around 6% against the real. This Monday, the US currency had its lowest closing rate since September 2021, at 5.2195 reais.

Part of the commodity’s high was already passed on in January, when Petrobras made an 8% increase in diesel prices at refineries, while gasoline sold to distributors had an average high of 4.85%.

When asked about further adjustments in fuel prices, given the tension between Russians and Ukrainians, Luna lost his way.

“We are following and monitoring to see if it is a point outside the curve or if it has already turned the curve. We are 24 hours following what is happening”, he said.

The Petrobras CEO added that he is rooting against a conflict and stressed that, for a war to be avoided, it will be necessary to have concessions on both sides.

“I think that a war itself is unlikely, but each side has to give in… A conflict, if it goes to the military air, nobody controls. This is a war that nobody wants. But it already exists at the diplomatic level, tensions and many actors worked.”

According to Luna, despite other bullish factors in the market, at the moment when “stabilizing the conflict” the price of Brent falls.

If there are factors that increase fuel prices for consumers, on the other hand, in the Brazilian Congress, there are discussions around projects that could make taxes levied on the prices of petroleum products more flexible, with a view to relieving costs.

Last year, the country’s official inflation was strongly impacted by the increase in fuel prices. Gasoline rose almost 48% and ethanol more than 62%, according to the IBGE.

Gasoline alone accounted for nearly a quarter of 2021 inflation which was 10.06%.