As of tomorrow, Petrobras will adopt a new pricing policy for gasoline and diesel sold at its refineries.

This policy will be based on two factors: parity with the international market, including costs such as shipping, internal transport costs and port fees; plus a margin to compensate for inherent operational risks, such as exchange rate and price volatility, delays at ports, profit and taxes. Petrobras’ Executive Board has decided that the company will not set its prices below this international parity level.

The main difference from what happens today is the timeframe for adjustments in relation to the international market. The new policy provides for evaluations to revise prices at least once a month. As the price of fuels will track trends in the international market, the prices charged at refineries may stay the same, rise or fall.

Adjustments to fuel prices at refineries will be made by Petrobras’ Markets and Prices Executive Group, composed of the CEO, the refining and natural gas director, and the finance and investor relations director.

The first evaluation made by the Executive Group indicated the need to cut diesel prices by 2.7% and gasoline prices by 3.2% at Petrobras’ refineries. The new prices will come into effect for sales starting midnight on Saturday, October 15.

To permit greater flexibility in the commercial management of products and to encourage sales growth, Petrobras will also consider granting one-off discounts for diesel and gasoline in specific markets. Under no circumstances will these discounted prices be lower than the company’s costs, however.

The Executive Group’s decision took into account growing import volumes, which have reduced Petrobras’ market share, and also seasonal factors in the global oil market. The increase in imports has been especially notable in the case of diesel, and imports now account for 14% of the country’s demand. In the case of gasoline, imports rose 28% per month between March and September of this year.

As Brazilian law guarantees pricing freedom in the market for fuels and oil products, the revisions made by Petrobras at its refineries may or may not be reflected in consumers’ end prices. This will depend on price changes made by other players in the oil chain, especially distributors and gas stations. If the adjustments made today are fully passed on, diesel could fall 1.8% or around R$0.05 per liter, while gasoline could fall 1.4% or R$0.05 per liter.