Brazil's Petrobras to raise fuel prices, giving investors relief
March 10 (Reuters) - Brazil's state-run oil company Petrobras will raise fuel prices at the refinery gate starting Friday, in a welcome respite for investors concerned about the growing discount that it has been offering to domestic consumers.
The move, announced in a securities filing on Thursday, will be the first fuel price adjustment by Petrobras in 57 days, and comes a day after the company said it was trying to avoid passing short-term global volatility to local prices.
Petrobras had been facing intense pressure to abandon its efforts to track global markets with its domestic fuel prices, with President Jair Bolsonaro calling that policy the "wrong laws designed a long time ago that cannot go on."
Petroleo Brasileiro SA , as the company is formally known, said in a securities filing that gasoline prices will rise 18.8% to 3.86 reais ($0.7653) per liter, while diesel prices will jump 24.9% to 4.51 reais per liter.
Petrobras said it will also raise liquefied petroleum gas (LPG) prices by 16% to 4.48 reais per kg, in the first price hike for the product in 152 days.
Petrobras shares rose 1% in midday trading in Sao Paulo, while the benchmark Bovespa stock index (.BVSP) slid nearly 2%.
"After oil prices were seen at consistently high levels, it became necessary for Petrobras to adjust prices so the Brazilian market continues to be supplied, without the risk of shortages," Petrobras said in the filing, adding that other fuel suppliers in the country had also raised their prices.
It added that domestic fuel prices were still below international rates, but the gap had narrowed.
Even after the sharp price hike due Friday, domestic gasoline and diesel prices are roughly 20% off the parallel rates in global markets, according to Pedro Rodrigues, head of the Brazilian Infrastructure Center (CBIE).
"There's still a gap. I think it's tricky for Petrobras to track and align (prices) for political reasons," Rodrigues said.
The conflict in Ukraine has sent global crude prices soaring, adding to double-digit annual inflation in Latin America's largest economy ahead of an October presidential election in which Bolsonaro plans to stand for re-election.
Over the weekend, the chairman of the Petrobras board resigned. Policymakers in Brasilia have been meeting this week to find a way to cushion the impact of rising fuel prices.
But the company said on Thursday it is committed to "competitive prices, in balance with the market."
($1 = 5.04 reais)
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