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As of 16:45 19 Jul 2018
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As of 16:45 19 Jul 2018

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What can a country do against rising global oil prices?

Daniel Gallas

BBC South America business correspondent

A man walks past Petrobras headquarters in Brazil

That’s a question Brazil has been grappling with for about a decade.

From 2011 to 2016, state-controlled giant Petrobras - which plays a big part in domestic fuel prices - offered great subsidies to consumers. They helped keep Brazil’s inflation down and secured job creation, but Petrobras suffered huge losses that threatened the company’s long-term prospects.

Then in 2016 came Mr Pedro Parente and the company took a U-turn. All subsidies were lifted and fuel costs began to oscillate according to global prices.

Petrobras’ financial credibility was restored but diesel consumers - particularly lorry drivers - felt a shock when global oil prices shot up.

Having tried both radical approaches, it is unclear what lies ahead for Petrobras and Brazil now. Mr. Parente’s resignation suggests some form of government intervention in prices will come.

But few investors will be pleased with the idea of purchasing shares of a company that is focussed on tackling inflation and unemployment, rather than just producing oil.

The government steps in

Petrobras chief executive Pedro Parente
Getty Images

More on the Petrobras news - the three-day strike held by truckers across Brazil has led to the Brazilian government stepping in to lower oil prices.

In a statement, Petrobras said that its other executives would remain, and its board would select an interim chief executive today to replace Pedro Parente (pictured above).

BreakingPetrobras chief executive steps down

Oil workers protesting outside Petrobras in Brazil
Getty Images

Pedro Parente, the chief executive of Brazilian state oil company Petrobras, has stepped down.

Brazilian oil workers held a three-day strike from Wednesday calling for Mr Parente to resign and for an end to the company's policy of setting prices at free-market rates, which has led to high oil prices this year.

Shares in Petrobras are down 8.4% and still falling following the news.