Petrobras fuel price cuts overdue, Brazil energy minister says

 (Reuters) – Brazil’s mines and energy minister thinks it is way past time for state-run oil company Petrobras (PETR4.SA) to reduce diesel and gasoline prices at its refineries, after a recent drop in oil prices and the strengthening of the Brazilian real.

Alexandre Silveira said on Friday he saw room for the oil giant to lower diesel prices by a range of 0.32 to 0.42 real ($0.06-0.08) per liter, while gasoline prices could be reduced by 0.10 to 0.12 real.

“I’m respecting Petrobras’ governance, but it’s time we speak to them again,” Silveira said in an interview with TV channel GloboNews, adding he had complained about it to President Luiz Inacio Lula da Silva’s chief of staff.

The state-controlled oil producer last announced a fuel price tweak on Oct. 19, when it reduced gasoline costs by an average 0.12 real but raised diesel prices by 0.25 real per liter.

At the time, Brent crude was trading above $92 per barrel, but since then it has slipped to around $78.50 a barrel, while Brazil’s real strengthened from 5.05 per dollar to 4.85 per dollar in the past month.

Those are two important metrics for Petrobras to decide on its fuel prices.

Earlier this year, the firm ditched a more market-based pricing policy in favor of one that gave it more flexibility to smooth price swings, but pledged not to sell fuel below profitable levels.

($1 = 4.8563 reais)

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