Brazil’s Petrobras to announce fuel price increase, alarming government

(Reuters) – Brazilian state-run oil company Petrobras (PETR4.SA) is set to announce a fuel price increase on Friday, local media reported on Thursday, raising alarm bells within the country’s top political ranks.

According to O Globo, the company’s board has approved diesel and gasoline price increases that will come into effect next week.

Petrobras said it could not “preemptively discuss decisions on price preservation or price adjustments due to competition issues.”

During his weekly live address to the nation on Thursday, Brazilian President Jair Bolsonaro, who is seeking to tackle high inflation in the country, said he hoped Petrobras would not increase prices.

Bolsonaro has repeatedly railed against any fuel price hikes by Petrobras while facing a tough battle for re-election in October.

Lower house speaker Arthur Lira said on Twitter later in the evening that Petrobras had declared “war against Brazil and the Brazilian people” by supposedly planning another price hike. Lira said he would hold a meeting with leaders on Monday to discuss Petrobras’ pricing policy.

Reuters reported earlier this week that the company would postpone prices hikes until the fuel tax cut bill had been finalized by Brazil’s congress, which approved it on Wednesday and is now awaiting presidential sanction. read more

Both houses approved the bill, which caps state taxes on fuels and other items, aimed at reducing prices for consumers.

Sources close to the matter told Reuters the lower tax burden should make any price hikes “less traumatic.”

Petrobras pegs it fuel prices to international crude.

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