This excerpt taken from the PBR 20-F filed Jun 30, 2005.
Substantial or extended declines in the prices of crude oil and oil products may have a material adverse effect on our income.
A significant amount of our revenue is derived from sales of crude oil and oil products. We do not, and will not, have control over the factors affecting international prices for crude oil and oil products. The average prices of Brent crude, an international benchmark oil, were approximately U.S.$38.21 per barrel for 2004, U.S.$28.84 per barrel for 2003 and U.S.$25.02 per barrel for 2002. Changes in crude oil prices typically result in changes in prices for oil products.
Historically, international prices for crude oil and oil products have fluctuated widely as a result of many factors. These factors include:
We expect continued volatility and uncertainty in international prices for crude oil and oil products. Substantial or extended declines in international crude oil prices may have a material adverse effect on our business, results of operations and financial condition, and the value of our proved reserves. In addition, significant decreases in the price of crude oil may cause us to reduce or alter the timing of our capital expenditures, and this could adversely affect our production forecasts in the medium term and our reserve estimates in the future.