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Petrobras Shares Plunge After Price Reversal

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The decision on the price of diesel revives the memory of the fuel subsidies that cost the company tens of billions of dollars.

Petroleo Brasileiro SA’s shares sank on Friday after the decision to reverse a previously announced increase in the price of diesel, raising concerns that the state-controlled oil company would cancel a market-based pricing policy.

“It gives us all a sense of déjà vu, ” said Paul Spyer, a director of brokerage agency Mirae Asset, in an interview. “It is too early to say that Petrobras’ pricing policy was abandoned, but the decision should keep the shares under pressure.”

Petrobras fell to 6.3 percent in Sao Paulo in the biggest drop since June 2018.

The decision on the price of diesel relives the memory of the fuel subsidies that cost the company tens of billions of dollars at the beginning of this decade, during the government of the Left Workers’ Party.

Brazilian President Jair Bolsonaro has been under pressure from truckers who have protested recent price increases, raising concerns over a repeat of last year’s national strike, which halted America’s largest economy. Latina and caused the resignation of Petrobras executive director at the time, Pedro Parente.

Petróleo Brasileiro SA’s shares sank on Friday after the decision to reverse a previously announced increase in the price of diesel, raising concerns that the state-controlled oil company would cancel a market-based pricing policy.

Vice President Hamilton Mourao said in a radio interview on Friday morning that Bolsonaro made the decision in thinking about the “collective good” of the country.

Petrobras said in the statement that it maintains alignment with international prices and that the decision to delay the price adjustment was made after reviewing its hedging position. The oil company did not respond to an email requesting further comments.