Brazil's Petrobras to Raise Gas and Diesel Prices
06 December 2016 - 10:20AM
Dow Jones News
RIO DE JANEIRO—Brazilian state-controlled oil company Petró leo
Brasileiro SA said Monday it will raise domestic fuel prices after
production cuts announced last week by the Organization of the
Petroleum Exporting Countries triggered a rally in global oil
markets.
Petrobras said it would raise prices at its refineries by 9.5%
for diesel fuel and 8.1% for gasoline, starting Tuesday. It cited a
spike in oil prices in recent days and a depreciation in Brazil's
currency.
The move came as Petrobras' relatively new management team, led
by Chief Executive Pedro Parente, seeks to burnish his
market-friendly credentials in the eyes of investors. Before his
appointment in May, the company was seen as more susceptible to
political pressure that, in years past, led it to waste billions of
dollars subsidizing fuel prices to help the government meet its
inflation target.
Partly due to that mismanagement, Petrobras is now struggling to
pay down $123 billion in debt, the largest amount of any company in
the oil industry. Turning a profit in its refining business will
likely prove crucial toward meeting the ambitious deleveraging
targets set by the new CEO.
Under Mr. Parente, Petrobras says it will review fuel prices at
least once every 30 days. Monday's hikes will largely reverse the
sizable price reductions Petrobras announced on Nov. 8, which
raised concern among some investors and may have contributed to a
selloff in its shares following the U.S. election.
A number of analysts noted in recent days that OPEC's deal to
reduce oil output last week would amount to a key test for Mr.
Parente. Following the rise in oil prices and the depreciation in
the real over the past month, Brasil Plural estimated Petrobras was
selling gasoline and diesel at a 1% and 3% discount to
international prices.
Write to Paul Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
December 05, 2016 18:05 ET (23:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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