Shares in Brazil's Petrobras plunge 19%

SAO PAULO — Shares in Brazilian state oil company Petrobras plunged on Monday after President Jair Bolsonaro changed the company's chief executive, fueling fears he will try to block further energy price hikes as he eyes reelection.

The company's ordinary and preferential shares both dived by more than 19 per cent shortly after opening on the Sao Paulo stock exchange, which was pulled down more than five per cent overall.

Bolsonaro on Friday appointed army reserve general Joaquim Silva e Luna as president of Petrobras, shortly after saying that "people can't be surprised" by the firm's price increases.

Petrobras has increased fuel prices four times so far in 2021, a cumulative rise of nearly 35 per cent, as global oil prices have recovered to pre-coronavirus pandemic levels.

"The government has clearly showed interference in Petrobras, because Bolsonaro is openly against the system of floating fuel prices," said economist Alex Agostini of credit rating firm Austin Rating.

"It's a clear signal he's going to intervene on prices. And we know when that's been done in the past under [former president] Dilma Rousseff, it led to very big losses for Petrobras," he said.

Shares in state electricity company Eletrobras were down eight per cent amid fears the far-right president would also target electricity prices as he gears up his bid to win re-election in 2022.

The Brazilian real fell more than 2.5 per cent against the dollar.