The workers' strike called by Petrobras labor unions has been declared illegal by Brazil's Superior Labor Court. The company approached the court after the labor unions warned they would begin a 72-hour strike on Wednesday, demanding the resignation of chief executive Pedro Parente and a change in the company's fuel pricing policy.
Parente, Bloomberg noted in a recent report on the developments, has been criticized for his approach to fuel pricing, but the company said on Friday he had no intention of leaving office.
As for fuel pricing, the unions' demand comes amid a truckers' strike that paralyzed Brazil for a week, prompted by the spike in fuel prices resulting from the international benchmark oil price rally and in turn causing even higher prices at the pump as tanker trucks could not reach fuel stations.
The government has been negotiating with Petrobras and the truckers and earlier this week agreed with the protesters to cut prices at the pump by 13 percent and keep them lower for 60 days. Also, the government convinced Petrobras to change its pricing policy, so starting June, the company will only adjust prices monthly instead of daily.
The news sent Petrobras shares sharply down as investors began worrying that the recent concessions may create unfair competition that would hurt smaller non-state fuel retailers. And there is more bad news for the company if it won a small victory against the labor unions.
Reuters reported earlier today that President Michel Temer was considering the removal of the market-based pricing policy of Petrobras as a whole and begin selling fuel at below cost. The news agency quoted a government source wishing to remain anonymous as saying that the market-based policy worked while oil pries were stable, but now that they have jumped considerably over a short period of time, this approach is no longer working, especially coupled with an unstable Brazilian real.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More