Petrobras pricing policy will bring doubts in Brazil

Significance

The new pricing policy replaces the previous import parity price applied since 2016 and may attenuate the impact of international price volatility on the domestic market. The new policy has generated concerns, as it is regarded as more interventionist than the previously market-oriented strategy.

Impacts

• The aim of increasing hydrocarbons output and refining may clash with government environmental promises in the short term.
• The pricing policy adopted by Petrobras will be more aligned with Lula’s campaign promises.
• The new policy will increase market doubts over the prospect of further governmental interventions.