Petrobras shares fall 7% after Bolsonaro signals price controls

The surge in oil prices on the international market caused by Russia’s invasion of Ukraine revives investor concerns about the political debate over Petrobras’ international price parity.

The state-owned company’s shares sank this Monday (7) after President Jair Bolsonaro (PL) criticized the system that equates the value of fuel in Brazil to the fluctuation of the price of raw materials and the dollar.

At the end of the trading session, preferred shares (which do not give the right to vote, but have preference in receiving dividends) lost 7.10%. Ordinary papers (with voting rights) plummeted 7.65%. As a result, Petrobras lost R$ 34.7 billion in market value.

The drop comes at a time when a possible Western embargo on the Russian energy sector has caused oil and natural gas prices to soar, raising prices for major world oil companies on Monday.

Chevron, the American giant in the energy sector, for example, rose 2.14% on the New York Stock Exchange. In this sense, Petrobras went against the grain of the sector, highlights Paula Zogbi, investment analyst at Rico.

The barrel of Brent, a reference for the world price of the commodity, reached the end of this Monday at US$ 123.89 (R$ 626.54). On Sunday (6) evening, it reached close to US$ 140 (R$ 708), close to the record of US$ 147.50 (R$ 746) in July 2008.

Russian Deputy Prime Minister Alexander Novak said in a video statement broadcast on state television on Monday that oil prices could rise to more than $300 a barrel if the United States and the Union European Union to ban oil imports from Russia.

“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Novak said. “The rise in prices would be unpredictable. It would be $300 a barrel, if not more.”

The fall of Petrobras exerted the main negative pressure on the Brazilian Stock Exchange. The Ibovespa, the country’s stock market benchmark, dropped 2.52% to 111,593 points.

Gustavo Cruz, strategist at RB Investimentos, says that Petrobras suffers the negative effects of the pressure generated by the high prices, but believes that the real impact will only be known if the government announces its plans on the subject.

“If it’s something momentary, Petrobras’ shares will suffer less. But if it’s something like before 2016 [quando a Petrobras não acompanhava os preços internacionais]will do much more harm,” he said.

Concerns about the effect of rising oil prices on government decisions on the market also affected private oil company PetroRio, which dropped 2.30%.

Alexandre Wolwacz, founder of Liberta Investimentos, says that the market volatility caused by the surge in oil would already represent a risk capable of leading investors to sell securities in the sector.

The situation is exacerbated by the fear that Bolsonaro will try to control fuel prices, repeating the practice of the government of Dilma Rousseff (PT).

“Government intervention revenue alienates investors from this sector. We have already seen what the result of this was for the company and for the country”, commented Wolwacz.

After resisting in the first hours of the session, the foreign exchange market began to reflect the effects of the risk aversion that infected the Stock Exchange. The dollar closed practically stable, with a high of 0.01%, at R$ 5.0790.

The American currency, however, has been showing a downward trend in recent months due to the entry of foreign investors into the country. They are attracted to the domestic financial market by a combination of high interest rates, a devalued real, cheap shares on the stock exchange and commodities (oil, ore and grains) with potential for appreciation in a scenario of possible scarcity due to war.

Threats brought by high oil prices to attempts to contain global inflation, which was already accelerating due to the disorganization of the global supply chain during the pandemic, also hampered the performance of the retail, travel and transport sectors, among others, of the stock market. of Brazil.

At the top of the list of falling stocks on Monday were the airlines Azul and Gol, whose shares plummeted 18% and 17.36%. Travel company CVC plunged 10.49%. Americanas collapsed 10.24%.

Global stock markets also retreated on Monday amid rising oil concerns.

In the United States, the Dow Jones, S&P 500 and Nasdaq indexes closed negative at 2.37%, 2.95% and 3.62%, respectively.

There is an expectation in the country that the Fed (Federal Reserve, the American central bank) will start this month to remove the reference rate for interest from zero.

The greater the inflationary pressure, the more aggressive the hike in interest rates can be – in the United States and also in other developed economies –, reducing the availability of money and the interest of investors for risky investments in exchanges around the world.

In Europe, the index that tracks the top 50 companies from countries that use the euro as their currency dropped 1.23%. The London Stock Exchange closed down 0.40%. Paris and Frankfurt dropped 1.31% and 1.98%, respectively.

Asian markets sank on Monday. The Tokyo, Hong Kong and Shanghai Stock Exchanges closed with losses of 2.94%, 3.87% and 3.19%, in that order.

With Reuters and AFP