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Brazil minister says government keen to lessen effect of oil price hikes

Brazil oil price

Beleaguered state-run oil firm Petrobras apprehensive of government policy

The Brazilian government is serious on lessening the effect that global oil price hikes have had on the country’s oil firm Petrobras, said a top politician.

Speaking to the media, Mines and Energy Minister Bento Albuquerque declared that the government won’t provide any grants, thereby reigniting doubts about the state-run oil refinery’s liberty to determine fuel costs.

He went on to say that President Jair Bolsonaro has confirmed that he doesn’t wish to come in the way of Petrobras or Petroleo Brasileiro SA determining the fuel costs through its virtual domination of the local refinery market.

Determining fuel costs has been a matter of grave concern for Petrobras, which has experienced severe setbacks of late due to the government’s constant meddling in fuel costs to curb inflation.

This compelled the state-administered oil organisation to sell gasoline and diesel at dismal prices. In April 2019, Bolsonaro scared investors when he directed Petrobras to revoke a diesel price rise in order to prevent a probable truckers’ revolt.

As a consequence, the preferred shares of Petrobras witnessed a plunge of 8 percent. In the subsequent week, the oil giant escalated the diesel cost and then, the government assured that it would no longer have a say in the organisation’s pricing matters.

Earlier, in its 2020-2024 investment plan, Petrobras had indicated that the 2020 production would stabilise at 2.7 million amid a project shutter every major subsalt FPSO for 15-20 days for maintenance and efficiency improvements in the first half of the year.

This would balance most of the newly installed production volume and retain next year’s output in sync with firm’s 2019 production target, said Petrobras.

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