The bank estimates spot prices remain a significant risk and recalls that the state-owned company has long said it will not pass on “short-term fluctuations” to consumer prices.
For UBS BB, given the market reaction over the past week, price uncertainty remains high and the scenario is not clear. Bank says it sees strong Brent curve fall behind [contrato futuro negociado abaixo do preço à vista].
It adds that adjusting gasoline and diesel prices will now have a political and reputational cost. “Brazil’s legislature, federal and state governments are actively discussing bills to lower fuel prices,” the bank recalls.
For UBS BB, the increase in Petrobras prices at this moment could “trigger negative reactions from the government and the population,” says an excerpt from the report signed by Luis Carvalho, Matthews Enfieldt and Tasso Vasconcelos.
UBS BB estimates that gasoline is about 25% less than import par and diesel is 20% less (some estimates put diesel at less than 30%).
Petrobras price target, according to UBS BB
The bank has a target price of R$44 for Petrobras shares (PETR4/PETR3) – currently in the range of R$34 and B$37, respectively – and an ADR price of $15.2, compared to the current level of $14.
Brent crude fell 0.07 percent on Thursday, but it is still trading at $112.85 a barrel. See real-time Money Times coverage.