Brazilian oil and gas producer Petrobras has ditched a practice of selling diesel and petrol domestically in line with global market prices, in a significant shift for the state-controlled group under President Luiz Inácio Lula da Silva.

It fulfils a key campaign promise by the country’s leader, who has criticised the cost of fuel and bumper dividends paid out by the company, whose market caps tops $72bn.

The old policy was introduced in 2016 after subsidies enforced by previous leftwing administrations led to multibillion-dollar losses for the group.

Petrobras will now base prices on either alternative supply costs for the customer, or the “marginal value” for the business. However, it did not reveal an exact formula.