Petrobras in Brazil raises gasoline prices for the first time in 11 months
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Petrobras Announces First Gasoline Price Hike in Nearly a Year
This week, Brazilian state-run oil behemoth Petrobras declared its intention to elevate gasoline prices for distributors, marking the first such adjustment in almost a year. The oil giant's announcement on Monday also included an increase in liquefied petroleum gas (LPG) prices, effective from Tuesday.
Investors reacted positively to the news, pushing Petrobras' shares up by as much as 1.9% during trading in Sao Paulo. The decision to raise gasoline prices by approximately 7% came somewhat unexpectedly and is the first such adjustment since Magda Chambriard assumed the role of chief executive, succeeding Jean Paul Prates in May.
Backdrop of Pricing Adjustments
The latest hike follows a 16.3% increase in gasoline prices back in August 2023, which was driven by rising global oil prices. Throughout 2023, Petrobras moved away from a strict market-based pricing policy in favor of one that afforded the company greater flexibility to mitigate price volatility. Notably, October 2023 saw the company reduce gasoline prices by an average of 4%.
Details of the Price Increases
According to the company's statement, the new gasoline price will ascend by 0.20 reais ($0.0366) per liter, reaching an average of 3.01 reais per liter. Concurrently, the average LPG price will see an increase of 3.10 reais, arriving at 34.70 reais per 13-kg cylinder.
Economic Impact and Inflation Projections
Andrea Angelo, a strategist at Warren Investimentos, highlighted the potential economic consequences of these changes. She noted that the combined effect of the gasoline and LPG price hikes could contribute an additional 18 basis points to the 2024 inflation rate. Specifically, the gasoline price increase alone is projected to contribute 13 basis points.
Consequently, Angelo has revised her forecast for Brazil's benchmark consumer price index (IPCA), now anticipating a rise of 4.28% for the year, up from her previous estimate of 4.10%.
With these adjustments, Petrobras continues to navigate the fluctuating dynamics of global oil markets and domestic economic pressures, balancing its pricing strategies to maintain both profitability and market stability.
