RIO DE JANEIRO (Reuters) – Shares of Brazil’s Petrobras plunged 8% on Wednesday after the state-run oil firm said its chief executive would step down, to be replaced by a former regulator with views closer those of President Luiz Inacio Lula da Silva.

Industry analysts expressed concern, as CEO Jean Paul Prates was seen as balancing the market demands for disciplined capital spending and healthy dividends with political demands to stabilize fuel prices and invest in job-creating sectors.

“It was unnecessary, because Jean Paul Prates was doing a very reasonable job,” said Frederico Nobre, chief equities analyst at Warren Investimentos.

Prates lasted less than a year and a half on the job – the fourth Petrobras CEO dismissed in about as many years for political reasons. His firing raises fresh fears that Petrobras will be used as a tool to fire up the Brazilian economy at the expense of minority shareholders.

Jefferies analysts said the CEO swap “appears to be an escalation of the push to intervene in the company,” in a note to clients downgrading Petrobras from “buy” to “hold.”

The ouster of Prates represents a win for members of Lula’s cabinet pushing for lower fuel prices, smaller dividends and more capital spending to create jobs and boost the economy.

“We see it as negative, as we believe it increases uncertainties in Petrobras’ investment case amid a period of stability, particularly as it relates to capital allocation,” Santander analysts said in a note to clients.

Preferred shares of Petrobras dropped as much as 8.2% in Sao Paulo morning trading on the news, making it the biggest faller on Brazil’s benchmark stock index Bovespa, which slipped 1%.

In Prates’ place, the government appointed Magda Chambriard, a former head of Brazilian oil and gas regulator ANP under the previous Lula’s Workers Party administration.

Petrobras’ workers union FUP, linked to Lula’s party, praised Chambriard’s nomination, saying the future CEO shares the group’s views on the need to strengthen Brazil’s shipbuilding industry and expand local refining capacity.

After Lula was elected in 2022, Chambriard was considered for the role of Petrobras CEO, and in an interview echoed many of Lula’s views on how the firm should be run – arguing for lower dividends to investors to free up cash for investments.

Until Chambriard takes over, the company’s board of directors plans to appoint Clarice Coppetti, executive officer for corporate matters, as interim CEO, three sources familiar with the matter told Reuters.

(Reporting by Fabio Teixeira, Marta Nogueira and Rodrigo Viga Gaier; Additional reporting by Peter Frontini and Gabriel Araujo in Sao Paulo; Editing by Brad Haynes and Michael Erman)