(Reuters) – Brazilian state-run oil company Petrobras said on Monday it would raise diesel prices by 8.9%, a move that will test the patience of President Jair Bolsonaro, who exhorted the firm last week not to lift them further.
Petroleo Brasileiro SA (PETR4.SA), as the company is formally known, said itwould raise refinery gate diesel prices to 4.91 reais ($0.96) per liter from 4.51 reaisfrom Tuesday.
It said in a statement that the hike, its first in two months, was necessary to track rising international diesel prices amid tighter global supply.
On Thursday, Bolsonaro had ripped into the firm, saying it was committing a “crime” against Brazil and that another price hike could bankrupt the country and cause a “national convulsion”. read more
In the statement, the company said it did not have the refining capacity to supply all of Brazil, meaning the country also depends on private refiners and importers who could stop functioning if Petrobras operates at a discount to international rates. That in turn could provoke supply shortages.
The last several days has been a tough baptism for Petrobras’ new Chief Executive José Mauro Coelho, who took charge last month after his predecessor fell out with Bolsonaro amid a spat over fuel pricing.
Coelho has made clear he believes the company must peg domestic fuel prices to international rates.
Brazil-listed preferred shares in Petrobras were off 1.8% in morning trade, in line with the nation’s benchmark Bovespa equities index (.BVSP).
According to analysts at Itau BBA, there was a 27% gap between international diesel prices and Petrobras’ local prices at the end of last week.
Pedro Rodrigues, head of the Brazilian Infrastructure Center (CBIE), said the price hike was inevitable.
“Regardless of the president’s and all consumers’ complaints and dissatisfaction, not tracking international price could lead to shortages,” he told Reuters.