After truckers, Brazil oil workers go on strike

Brazilian oil industry workers carry a banner reading "Oil Industry Workers Nationwide Strike" on the first day of their work stoppage to protest high fuel and cooking gas costs. (AFP/Mauro PIMENTEL)

The strike, which is demanding the resignation of Petrobras oil company CEO Pedro Parente, went ahead despite a ruling by Brazil's highest labor court that it was illegal.

Unions also want an end to state-controlled Petrobras' market-based pricing policy, put in place in 2016 by centre-right President Michel Temer as part of his attempts to open up Brazil's sluggish economy.

"Oil workers are on strike. Those who thought we wouldn't fight against abusive pricing for fuel were wrong," Tezeu Bezerra, coordinator for the Sindepetro Norte Fluminense union in Rio de Janeiro, said in a statement to the workers.

The protest was sparked by discontent over high fuel and cooking gas costs in Brazil, Latin America's biggest economy.

Disruption was expected to be minimal, but unions said a much larger strike may be held next month.

"We can guarantee that these 72 hours will not see supply problems because the refineries have full tanks," the oil workers' federation said in a statement. "This strike is not being held to hurt society but to open a debate."

The federation said that if demands were not met, an indefinite strike could be called in mid-June. "This is a warning strike," it said.

Angered by rising diesel prices, the nation's truck drivers launched their own work stoppage 10 days ago and succeeded in shutting down much of the country's economy.

Supermarkets ran out of fresh food and entire cities were left without functioning gas stations. Even though the truckers' strike is now over, the aftershocks are still being felt through national supply chains.

The oil workers' federation said their strike was being observed at eight refineries and partially at a ninth, with three other non-refinery plants also affected.

The turmoil over the last week has seen Petrobras' share price make wild swings, rising 14 per cent higher on Tuesday on the Sao Paulo exchange, but trading flat on Wednesday.

Markets are concerned that the pressure will prompt Temer to roll back Petrobras' pricing autonomy.

However, Temer's government issued a statement saying it was "committed to the financial health of Petrobras, a company which has recuperated from the serious crisis of the last two years under Pedro Parente's management."

"We will continue to keep the pricing policy at Petrobras," the government statement said.

On Sunday, Temer bowed to pressure from the truckers when he agreed to cut the diesel price by 0.46 reais a litre for 60 days.

Diesel costs had risen from 3.36 reais (US$0.92) a litre in January to 3.6 reais before the strike. On May 26, the price hit 3.8 reais per litre.

Brazil's average oil output was 2.62 million barrels per day in 2017.