Shares in Brazil’s state-run oil company, Petrobras, partly regained their losses Tuesday after diving by more than 20 percent on news that President Jair Bolsonaro was changing the firm’s chief executive.
The company’s ordinary and preferential shares both gained more than 10 percent in early trading on the Sao Paulo stock exchange, before losing ground again.
Ordinary shares were up around 6.3 percent and preferential shares around 8.1 percent in volatile midday trading, after closing down 20.5 percent and 21.5 percent respectively Monday, erasing 74 billion reais ($13.5 billion) off the company’s market value.
Traders were closely watching for news on a closed-door meeting Tuesday of the Petrobras board, which must decide whether to accept Bolsonaro’s appointment of army reserve general Joaquim Silva e Luna to the CEO job.
Bolsonaro on Friday named Silva e Luna, a former defense minister, to replace Roberto Castello Branco, an economist well-regarded by the business sector.
The move fueled fears the far-right leader would try to intervene in energy prices as he eyes re-election next year.
It also appeared to widen a growing rift between Bolsonaro and the business sector, which helped him win election in 2018 thanks to his promises of investor-friendly reforms and free-market policies.
Bolsonaro said shortly before the change was announced that Petrobras, Brazil’s biggest company, should not be constantly “surprising people” with price increases, and lashed out at Castello Branco’s management.
He hinted Tuesday at more changes to come at Petrobras.
“You’ll see how Petrobras is going to get better. And that whatever changes we have to make, we’ll make them,” he told supporters outside the presidential palace in Brasilia.
Petrobras has increased fuel prices four times so far in 2021 — a cumulative rise of nearly 35 percent — as global oil prices have climbed back to pre-coronavirus pandemic levels.
The price hikes have triggered backlash in Brazil, notably among truck drivers, who vowed a crippling strike.
Brazil, Latin America’s biggest economy, is a top 10 oil producer, with output of 3.67 million barrels per day in 2019.
The Sao Paulo stock exchange’s Ibovespa index was up 1.6 percent overall.
