Petrobras head resigns as Brazil President rages about fuel prices

Petrobras’s chief executive officer Jose Mauro Coelho resigned following a fuel price increase that has angered President Jair Bolsonaro and prompted calls for a congressional inquiry.

Petroleo Brasileiro SA, as the company is formally known, announced his resignation in a statement on Monday. Bolsonaro had already fired Coelho in May and named a replacement, but he remained in the role while the state-owned oil firm went through the formal procedures for appointing the next CEO.

The Rio de Janeiro-based company, which recently lost the title of Latin America’s most valuable publicly-traded firm to miner Vale SA, lost about 35 billion reais ($6.8 billion) in market value since Friday, when it raised domestic fuel prices, irking Bolsonaro and his allies. Preferred shares dropped as much as 5.1% to 25.91 reais in early trading in Sao Paulo. 

“We don’t expect noise to fade until October,” Banco BTG Pactual SA analysts led by Pedro Soares wrote in a note. “Any future pressure to raise fuel prices will find major government pushback between now and election day.”

Brazil’s president, who is seeking re-election in October, has been publicly bashing Petrobras for what he calls “abusive profits” and has sacked three of its chief executive officers over frustration with the company’s wholesale fuel prices that track international levels. Pump prices and inflation in general are a major complaint among voters. 

Bolsonaro said on Saturday he has the support of congress to start a probe into the state-controlled company and its pricing policy. Lower house Speaker Arthur Lira has also threatened to intervene by imposing punitive taxes on the company’s record profits.