Brazil’s state-controlled oil company Petroleo Brasileiro SA raised domestic diesel prices, saying it is concerned that the conflict in the Middle East will continue to put pressure on the oil market.
At the same time, Petrobras cut gasoline prices because it expects global demand to ease as the summer driving season in the US and elsewhere in the Northern Hemisphere ends, leading to more availability of the fuel and a wider discount to oil, the company said in a statement on Thursday. Petrobras is also operating its Brazilian refineries near full capacity, contributing to robust supplies of the fuel.
The Rio de Janeiro-based company routinely comes under political pressure to make motor fuels affordable in Brazil. Petrobras changed its fuel price policy this year to prioritize maintaining a dominant market share in Brazil over tracking international price levels. The company has denied any political interference in its decisions on fuel prices.
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After holding prices stable since mid August, Petrobras announced a 6.6% increase in diesel prices for distributors to 4.05 reais a liter ($0.80) as of October 21. It cited rising crack spread prices as a consequence of “sustained global demand, with expectations of a seasonal increase.”
Meanwhile, the company cut gasoline prices 4.1% to 2.81 reais a liter.
“It is necessary to make the adjustment in order to rebalance with the market,” it said.
Minutes before the announcement, Chief Executive Officer Jean Paul Prates said in a live interview that Petrobras was running its refineries at 97% of capacity. He also said that the company started reviewing its prices after the conflict between Israel and Hamas sent oil prices higher, which reduced the impact of cheaper imports of Russian diesel.
(Updates to add additional details from Petrobras’s statement on fuel prices)
