Petrobras boosts gasoline prices as subsidy blunts consumer impact

The impact on fuel distributors, however, will be limited to R$0.04 per liter, or 1.56%, because Petrobras agreed to receive a government subsidy of R$0.44 per liter of gasoline. Specialists disagree on how much the measure will ultimately affect consumer prices.

The last time Petrobras raised gasoline prices at its refineries was on July 8, 2024, when it increased them by 7.12%. In January, the company reduced gasoline prices by 5.17%. “The effect on distributors and final consumers is mitigated by the economic subsidy granted by the government,” Petrobras said in a statement.

Petrobras Chief Executive Magda Chambriard attended a press conference on Wednesday regarding investments in the northeastern state of Sergipe, but did not comment on the price adjustment.

Petrobras has been selling fuel below international prices, arguing that it does not pass through short-term market volatility such as that caused by the conflict involving the United States, Israel, and Iran.

Even after Thursday’s increase—including the subsidy amount—the company continues to sell gasoline below international parity levels.

According to data from the consultancy StoneX, Petrobras gasoline is 35.2% below international prices, equivalent to roughly a R$ 0.90-per-liter gap. Without the latest adjustment, that gap would have reached R$1.38 per liter.

The subsidy is part of a government package to soften the impact of tensions in the Middle East on fuel prices in Brazil. The measure was established through a provisional presidential decree issued on May 13, capping gasoline and diesel prices sold by refineries and importers at R$0.89 per liter above the subsidized benchmark.

Fuel distributors and retailers are not eligible for the subsidy unless they hold authorization to import refined products directly or through affiliated trading operations. Market specialists remain divided over whether the subsidy will effectively limit pump prices.

David Zylbersztajn, a former director-general of Brazil’s National Petroleum Agency and professor at the Pontifical Catholic University of Rio de Janeiro, said the government’s objective of avoiding larger pass-throughs to consumers is likely to succeed during this first Petrobras adjustment since the conflict escalated.

“In theory, prices are free, but the impact at the pump should be minimal. There is no reason for the subsidy not to work in cushioning the effect on final prices,” said Zylbersztajn, who also chairs the board of Sindicom, an association representing Brazil’s largest fuel distributors.

In his view, the effect on consumers should be close to the R$0.04-per-liter increase charged by Petrobras to distributors. He noted that the post-subsidy adjustment is very small relative to the retail price of gasoline.

According to a survey by Brazil’s National Petroleum Agency, average gasoline prices at service stations last week stood at R$6.62 per liter. A R$0.04 increase represents slightly more than 0.6% of that average. “Petrobras is selling with a R$0.04 increase. It is negligible,” Zylbersztajn said.

Others in the industry are less convinced.

James Thorp Neto, president of the National Federation of Fuel and Lubricant Commerce, said the market is too dynamic to isolate the subsidy’s effect accurately. As examples, he cited falling prices for ethanol and biodiesel, both of which also influence final fuel prices. “There are so many factors affecting prices that it becomes difficult to know exactly what causes them to rise or fall,” Thorp said.

Another industry source noted that retail prices ultimately depend on competitive market conditions and distributors’ commercial strategies. Bruno Cordeiro, a market-intelligence analyst at StoneX, said imported fuel prices have recently declined because crude oil prices eased amid growing optimism about extended peace negotiations between the United States and Iran.