Petrobras (PBR +1%) extends gains in a week its shares have soared ~15% in anticipation of a victory by Jair Bolsonaro in this weekend's presidential election in Brazil, which would prevent the leftist Workers Party from returning to power.
But while Brazil's business community has confidence in Bolsonaro's top economic advisor, it is discomforted by the candidate's populist tendencies, and he has waffled on the issue of privatizing PBR and broader market principles.
Bolsonaro has bashed PBR's market-based fuel pricing policy, with a diesel price subsidy ending on Dec. 31, potentially resulting in an immediate 0.30/liter reais ($0.08)l price increase.
Analysts question whether rival Fernando Haddad, whom Bolsonaro may face in a runoff, would have the capital to roll back the major oil industry reforms adopted by predecessor Michael Temer, particularly a rule excluding foreign companies from operating pre-salt assets, as he has pledged.
Now read: Here's Why Brazil Looks So Ugly »
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