With oil prices being a major part of life—and their frequent fluctuations bringing us plenty of stress along with them—the word out of oil stock Petrobras (NYSE:PBR) gave investors a lot to like. Petrobras added over 4.5% at one point in Wednesday afternoon’s trading thanks to word that the Brazilian government was keeping quiet about fuel prices in the region.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Some wondered—particularly after Petrobras suddenly hiked prices on gasoline and diesel fuel following a major worldwide spike—if perhaps the Brazilian government might have intervened, calling on Petrobras to keep a lid on price hikes. Petrobras kept no such lid, sending gas prices up 16.3% and diesel prices up 25.8%. It’s actually the first such hike Petrobras has engaged in since Brazil’s new president, Luiz Inacio Lula da Silva, took office in May. And Petrobras hurried to noted that there was no urging, in any direction, about fuel prices, out of Lula.
In fact, Lula has been quite friendly to Petrobras, as evidenced by another major decision. Petrobras also wanted to start drilling for oil in the Amazon, a move authorized by the Lula government. Some believe that this directly conflicts with Lula’s plans to step up the “energy transition” to more sustainable sources. But, as Lula’s chief of staff, Rui Costa, pointed out, that takes money. The kind of money that comes from oil sales. And with Petrobras still paying out decent dividends, it’ll take that much more oil sales to make a move to sustainable energy.
Analysts, meanwhile, narrowly back Petrobras. With two Buy ratings and five Hold, Petrobras stock qualifies as a Moderate Buy. Further, with an average price target of $14.19, Petrobras stock still comes with a meager 1.03% upside potential.
