Petrobras shares plunge 10% after fuel price cut

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Sao Paulo (AFP)

Shares in Brazil's state-owned oil company Petrobras tumbled 10 percent on Thursday, a day after it temporarily reduced fuel prices in response to a truckers' strike.

At 10:53 am (1353 GMT), the price of preferred shares had plummeted 11.26 percent and of ordinary shares 10.61 percent on the Sao Paulo stock exchange, while the Bovespa index was down just 1.29 percent.

On Wednesday Petrobras yielded to pressure and temporarily reduced fuel prices after striking truckers threatened to paralyze airports and nationwide commerce.

The 10 percent price reduction will only last two weeks and was offered as a way of defusing an increasingly out-of-control situation.

"It is a one-off measure. It doesn't represent a change in pricing policy," Petrobras chief Pedro Parente told journalists. "These are 15 days for the government to reach a deal with the truckers."

The truck drivers have attempted to put a stranglehold on movement of goods in Brazil -- using their rigs to block roads -- to protest fuel price rises, which saw refinery diesel before tax up 12 percent this month and petrol 14 percent higher.

The increases are the result of a politically sensitive decision made in late 2016 to allow Petrobras autonomy over its pricing.

But the determination of the truckers has caught center-right President Michel Temer's government flat-footed.