Petrobras Sinks as Price Reversal Sparks Intervention Fear

(Bloomberg) -- Petroleo Brasileiro SA sank on Friday after a decision to reverse a previously announced diesel price increase raised concerns that the state-controlled oil company will undo a policy of market-based prices.

“It gives us all a deja vu feeling,” Pablo Spyer, a director at brokerage Mirae Asset, said in an interview. “It’s too early to say that Petrobras’ price policy was abandoned, but the decision should keep the stock under pressure.”

Petrobras fell as much as 6.3 percent in Sao Paulo in the biggest drop since June, 2018.

The diesel price decision revives memories of fuel subsidies that cost the company tens of billions of dollars earlier this decade during the rule of the left-wing Workers’ Party. President Jair Bolsonaro has been under pressure from truckers who have protested recent price increases, stirring concerns of a repeat of last year’s nationwide strike, which brought Latin America’s largest economy to a halt and caused the resignation of Petrobras Chief Executive Officer Pedro Parente.

Vice President Hamilton Mourao said in a radio interview Friday morning that Bolsonaro made the decision thinking of the “greater good” of the country.

Petrobras said in the statement that it maintains an alignment with international prices, and that the decision to delay the price adjustment was taken after reviewing it’s hedge position. It didn’t respond to an email requesting further comment.

Pacifico Gestao de Recursos, Leonardo Rufino

• “It’s a terrible decision, even if it was taken in order to avoid another trucker’s strike”
• “I’d be surprised if Petrobras shares didn’t post a sharp drop on today’s session”
• “We can’t say that the policy of parity with international prices was abandoned, but the odds of that happening have increased”

Planner Corretora, Luiz Francisco Caetano

• Decision is negative
• “That reminds us of previous administrations that used Petrobras’s prices for political ends”

Mirae Asset, Pablo Spyer

• “It gives us all a deja vu feeling”
• “It’s too early to say that Petrobras’ price policy was abandoned, but the decision should keep stock under pressure”

Novus Capital, Luiz Eduardo Portella

• The political interference in Petrobras is a negative factor and should lead to a correction of local assets
  • “All interference is negative”

--With assistance from Felipe Saturnino.

To contact the reporters on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net;Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Peter Millard, Julia Leite

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