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Brazil cuts fuel prices amid strikes

President Temer vows to spare Petrobras, an oil company embroiled in a graft scandal three years ago

By Daniel J. Graeber
Brazil's president cuts diesel prices in an effort to bring striking lorry drivers off the picket line. File Photo by Stephen Shaver/UPI | <a href="/News_Photos/lp/aac46b34db7c64de667707effdbe7eb3/" target="_blank">License Photo</a>
Brazil's president cuts diesel prices in an effort to bring striking lorry drivers off the picket line. File Photo by Stephen Shaver/UPI | License Photo

May 29 (UPI) -- The price of diesel in Brazil will be reduced for the next 60 days in an effort to bring striking truck drivers back to work, the nation's president said.

Lorry drivers have protested higher fuel prices for much of the month. Late Sunday, Brazilian President Michel Temer tabled a proposal to cut prices for 60 days and suspend some highway tolls in an effort to appease the striking workers.

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"We have advanced in the implementation of many measures, in view of the need for the movement to end the standstill," he said in a statement. "We spent this week focused on meeting the demands of the truck drivers and worried about every Brazilian and Brazilian who faced difficulties these day

Temer's remedies came after energy company Petrobras posted its strongest quarter in years, though the strike has spilled over to hit Latin America's largest economy because of the slow movement of everything from steel to livestock.

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The situation could drag on, however. According to energy news service Argus, refinery workers could stage a 72-hour walk off on Wednesday.

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Shares in Petrobras, formally Petroleo Brasileiro, closed down 1.3 percent on Friday. Steeper losses are expected in the holiday-shortened start of the trading week in New York.

Temer said the measure to reduce the price of diesel would not, however, result in losses for Petrobra.

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"Petrobras has recovered over the last two years and it is not possible to create operational and resource difficulties that will remove from it the great national and international prestige it has recovered over the past two years," he said.

The Brazilian company said its first quarter profit of $1.8 billion was its best in five years. Petrobras attributed the improvement to a recovery in crude oil prices. This recover, the company explained, led to higher margins on the sale of oil products. Sale volumes, mainly gasoline, declined from last year.

In early 2015, and in its first audited statement in nearly a year, Petrobras wrote off about $17 billion, of which $2.1 billion was due to alleged graft. The company tried to sell off more than $13 billion assets in an effort to move past a "sad chapter."

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