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Petrobras CEO resigns, raising questions over Brazil economy

Carl de Souza, AFP | Parente resigned on June 1, 2018, in the wake of a devastating truckers' strike over high fuel prices.

The president of Brazilian state oil company Petrobras resigned on Friday, the latest fallout from a crippling truckers' strike over fuel prices that has widespread implications for the future of Latin America's largest economy.

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The 9-day strike led to massive shortages of supplies ranging from food to medicine, shuttered thousands of public schools and grounded numerous flights.

It ended earlier this week when the government announced plans to subsidize the price of diesel for 60 days. President Michel Temer and several ministers went to great lengths to argue that their bucking to truckers' demands would not interfere with Petrobras' ability to set prices, a key part of the company's rebuilding plan after a massive corruption scandal.

They also said Petrobras CEO Pedro Parente, widely respected in Brazil and beyond, would remain in place.

The markets, however, were not convinced. Petrobras' stock price dropped sharply in the last two weeks, reversing large gains made in recent years.

In a statement Friday, Petrobras said Parente had resigned and that an interim CEO would be named.

The development raises questions about the future of one of Brazil's most important companies.

Ultimately, truckers and many other sectors in Latin America's largest nation want a return to the recent past, when the government and Petrobras would set fuel prices that were heavily subsidized.

However, that stands in stark contrast to Petrobras' approach in the last couple years. As part of a series of reforms aimed at pulling Brazil from a deep recession, Temer's administration said there would no longer be interference in Petrobras pricing.

The company recovered and grew, and market prices worked fine while world oil prices were low. But the combination of rising prices and a sharp devaluation of the Brazilian real against the US dollar caused prices to jump, which had an acute impact on truckers.

As part of their demands, they also asked that Parente step down.

(AP)

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