Right-wing candidate Jair Bolsonaro won the presidential run-off election in Brazil in an expected win over the leftist candidate on Sunday, due to the dissatisfaction of Brazilian voters with corruption and crime and the huge graft scandal at oil firm Petrobras that took place under the rule of the leftists who were in power for most of the past decade and a half.
Markets cheered the election outcome, and shares in Petrobras were up more than 7 percent in pre-trading hours on Monday.
Bolsonaro is promising a major change of course in Brazil, saying in his acceptance address that "We cannot continue flirting with socialism, communism, populism and leftist extremism."
According to Kenneth Rapoza, Senior Contributor at Forbes, the presidential election was only Bolsonaro's to lose, and the Petrobras bribery scandal contributed a lot to Brazilian voters not backing centrist candidates in the race.
Before the run-off on Sunday, the oil industry was cautiously optimistic, expecting that Bolsonaro would keep the current favorable environment for investments in oil and gas in Brazil, according to S&P Global Platts.
"Bolsonaro represents the current, favorable status quo although there could be some hiccups," an oil industry executive recently told S&P Global Platts.
In September, in the last oil auction for Brazil's coveted pre-salt layer before the elections, Chevron and Shell led Big Oil's big bets on the offshore blocks up for grabs.
Bolsonaro has said that he would favor a market-friendly approach and analysts expect him to continue with the policies that have managed to attract big bets from Big Oil in Brazil's offshore over the past two years. One concern, Platts notes, is that the president-elect is reportedly considering naming a general as chief executive at Petrobras. Bolsonaro has also been critical of Chinese investments in Brazil, while CNPC and CNOOC are partners in the Libra field, and CNPC has just signed an agreement with a CNPC subsidiary to carry out a feasibility study to assess the investment case for the COMPERJ refinery in Brazil.
On the other hand, Bolsonaro supports the divestment plan of Petrobras.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More