Petrobras shares lose value after announcement of lower gasoline prices in Brazil

Petrobras will reduce the prices of gasoline and diesel in its refineries as of Wednesday March 1sta move that will likely offset the resumption of federal fuel taxes.

Shares of the company fell sharply after the news, trading down more than 3% at midday and making Petrobras one of the biggest losers on the local benchmark Bovespa stock index, which fell 0.5 percent.

The price cut comes as the government announced on Monday that it was ready to resume collecting fuel taxes, putting end of exemption established by former President Jair Bolsonaro last year, a measure that will increase public revenue but will be considers the middle class annoying.

Brazil’s Finance Ministry had already said earlier on Tuesday that it was considering lowering prices of Petrobras as a way to offset the effect of the tax increase.

Petróleo Brasileiro SA, as Petrobras is formally known, said it will cut average gasoline prices by almost and 4%while diesel values ​​will be reduced by around 2 percent.

Gasoline will now sell for 3.18 reais ($0.6103) per liter, down from 3.31 reais, and diesel at 4.02 reais, up from 4.10 reais previously, the company said, adding that the move was aimed at maintaining prices. local markets “in equilibrium” with global rates.