By Jeffrey T. Lewis and Luciana Magalhães

SÃO PAULO--Brazilian oil company Petróleo Brasileiro SA, or Petrobras, suffered a disaster the last time the state-controlled company abandoned a fuel pricing policy based on import price parity and lost $40 billion as a result, Chief Executive Officer Roberto Castello Branco said Thursday.

Brazilian President Jair Bolsonaro wants to oust Mr. Castello Branco after a dispute over the company's fuel pricing policy. Mr. Bolsonaro called an almost 10% increase in the price of gasoline and an almost 15% increase in the price of diesel fuel that the company announced last week excessive, and Friday he nominated Joaquim Silva e Luna, an army general, to replace Mr. Castello Branco.

The CEO, speaking during a conference call discussing Petrobras' fourth-quarter earnings, said oil is a commodity priced in dollars, and that fuel prices should be set based on costs. While Dilma Rousseff was Brazil's president, the company sold gasoline and diesel fuel below cost, resulting in the giant losses Mr. Castello Branco mentioned.

On Tuesday, the company's board voted to hold a shareholder meeting to consider the nomination.

While it's still not certain that Mr. Silva e Luna will in fact replace Mr. Castello Branco, the turmoil surrounding the company's top manager led to a more than 20% decline in Petrobras' share price on Monday as investors reassessed the outlook for the company amid government interference in its management and pricing policy.

The Rio de Janeiro-based company said Wednesday it had a net income of 59.9 billion reais, equivalent to $11 billion, in the fourth quarter, compared with net income of 8.2 billion reais in the same period a year earlier. Recurring net income, which excludes one-time items, rose to 28.4 billion reais from 12.9 billion reais a year earlier

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

(END) Dow Jones Newswires

02-25-21 0907ET