Petrobras is closely monitoring the fallout from conflict in Iran and expects to watch oil prices - which surged on Monday - for the next week before taking decisions on fuel prices, four people familiar with those assessments told Reuters.
Global oil prices jumped after Iran's retaliatory attacks disrupted shipping through the key Strait of Hormuz, following weekend strikes by Israel and the US that killed Iran's supreme leader, Ali Khamenei.
Brent crude rose as much as 13 per cent on Monday and was up about eight per cent around noon Brasilia time, boosting the shares of Petrobras, which also exports crude.
"This will be a week of observation that could lead to a decision next week (on fuel prices), but there are still uncertainties," one source said, speaking on condition of anonymity.
Petrobras must also watch the exchange rate, which is part of its fuel-pricing equation, the sources said.
A prolonged conflict could prompt capital flight from the United States, and Brazil could become a destination for some of those flows, one of the people said, explaining that a weaker dollar could offset higher oil prices.
Petrobras is also monitoring the war's impact on oil and fuel production facilities, as well as logistical bottlenecks created by the conflict.
A third concern involves the potential closure of the Strait of Hormuz, through which 20 per cent of the world's oil flows. The strait has never been fully closed, but over the weekend there were reports that vessels stopped moving and were even targeted.
The strait's total shutdown would significantly affect global oil flows and could force a major reshuffling of shipping routes. Petrobras could benefit on one hand, but it might also need to buy potentially more expensive crude and derivatives from other regions.
Petrobras imports daily volumes of crude to blend with its own production, another point requiring attention.
Still, Petrobras' Executive Director of Logistics, Commercialsation and Markets, Claudio Schlosser, said the company has alternatives and flexibility to operate competitively despite the Middle East conflict.
"Petrobras has alternative routes outside the conflict zone, which gives us security and competitive costs for our operations, preserving our margins," Schlosser told Reuters.
He declined to comment on potential changes to Petrobras fuel prices.
Most imports come from outside the crisis region, he said, adding that, "the few that do exist can be redirected."
(Reporting by Rodrigo Viga Gaier; Writing by Oliver Griffin; Editing by Roberto Samora and Andrea Ricci)
