Petrobras Urged by Lula to Cut Fuel Brokers Who ‘Rob’ Consumers

(Bloomberg) -- Brazil’s state-run oil producer Petrobras should get rid of intermediaries and sell directly to consumers in order to lower fuel prices, President Luiz Inacio Lula da Silva said Monday.

The President’s popularity hit an all-time low this month as his administration became embroiled in crises and Brazilians grew frustrated with rising prices.

Petroleo Brasileiro SA, as the company is formally known, is constantly under government pressure to shield consumers from volatility in the oil markets, while private investors fear the company would sacrifice profits to subsidize politically sensitive motor fuels as it has done in the past.

Last month, Petrobras raised diesel prices for the first time since October 2023 to reduce a gap with international markets. The 79-year-old leftist leader blamed gas stations and state taxes for charging much higher prices compared to Petrobras’s at the refinery gate.

“In the end, the people are robbed by the intermediary and the fame goes to the government,” Lula said in a ceremony to announce Petrobras plans to increase its fleet of vessels, helping to revive Brazil’s shipbuilding industry.

Petrobras began direct sales of diesel to large consumers in 2024, creating sales hubs in the Southeastern states of Minas Gerais and Sao Paulo. The company will supply iron ore producer Vale SA’s fleet of trucks, trains and vessels with R5 diesel, with 5% renewable content.

The Rio de Janeiro-based firm announced Monday it is ordering eight new LPG vessels and considering revamping old oil platforms that otherwise would be dismantled. Petrobras will spend 23 billion reais ($4 billion) in total to add 44 new vessels to its fleet, as part of a wider effort to expand industrial activity in Latin America’s largest economy.

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