Petrobras falls on the stock market after the arrival of Lula to power in Brazil

The Brazilian oil market does not look favorably on Lula’s arrival in power. Shares of Brazilian state oil company Petrobras fell on Monday, sending the Sao Paulo Stock Exchange down more than 3% on the first day of Luiz Inacio Lula da Silva’s presidency. Petrobras preferred securities were down 6.6%, while common shares were down 5.71%. Investors fear greater state interventionism in the economy during the left-wing leader’s term, analysts said. The decline of Petrobras, a state-owned company with open capital, weighed on the Sao Paulo Stock Exchange, its main index, the IBovespa, losing 3.07% at the same time.

The market’s reaction is due to various factors, relating to oil taxation and the possibility that the price policy of the oil company will be modified, Gilberto Braga, financial analyst and professor at Ibmec in Rio de Janeiro, told AFP. . “There is a market reading that there will be stronger interference every day in public company guidelines,” he added.

Uncertainties

Senator Jean Paul Prates, appointed by Lula to chair Petrobras, said Friday that the oil company’s pricing policy – which sets fuel prices based on parity with the international price of a barrel of oil – will change. The senator did not give more details, thus contributing, according to the IBMec professor, to a scenario of uncertainty.

When announcing his first decisions on Monday, Lula also returned to the process of privatization of eight public companies, including Petrobras and Correos, launched by the administration of his far-right predecessor Jair Bolsonaro. During the presidential campaign, Lula, 77, had criticized the privatizations and announced that during his term, no other state companies would be sold. It is necessary to establish “a rigorous analysis of the impacts of privatization on public services and the market”, he explained.

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