Petrobras’s Distribution Unit Is Cutting Gasoline Prices 6%

Petroleo Brasileiro SA (PETR4)’s BR Distribuidora distribution unit will cut gasoline prices by six percent because a new sugar harvest has increased ethanol supply, reducing the cost of blended fuel in the country.

Gasoline prices will be reduced because the fuel contains 25 percent ethanol, a spokesman for BR Distribuidora, who can’t be named under company policy, said today by telephone.

The government is pressuring Petrobras to lower gasoline prices to keep inflation in check, Bruno Varella, an analyst at Banco Bradesco SA, said in a telephone interview from Sao Paulo. Brazil’s inflation accelerated 6.5 percent in April, compared with a year earlier. The price drop won’t have a significant impact on Petrobras’s profits, according to Varella.

“I don’t see a big impact on Petrobras’s results,” he said. “Margins at the distribution unit are very low, it’s a very small part of the company.”