By Gabriel Araujo, Lisandra Paraguassu and Gram Slattery

SAO PAULO (Reuters – Brazil’s government-run oil company Petrobras fell Tuesday as the government dismissed its chief executive twice in the past two months. It also signalled plans to modify the company’s market-based pricing policy.

Jair Bolsonaro is rage against Petrobras’ series of price hikes for fuel. Formerly known as Petroleo Brasileiro SA., these have contributed to inflation in Brazil that has reached double-digit levels.

Bolsonaro has been able to limit political interference for a good portion of his term. However, Bolsonaro has seen his government adopt a more aggressive position on fuel prices since the conflict in Ukraine continues and Brazil’s presidential election is near.

In afternoon trade in Sao Paulo, preferred shares of the company plunged 4.7%. This is far more than the 1.2% drop for Brazil’s benchmark stock equities index.

Bolsonaro’s chief staff Ciro Nogueira claimed Tuesday that Bolsonaro was “anguished” at rising fuel prices. He said the company’s price policy needs to be in line with the view of an energy minister who assumed office earlier this month.

Many analysts were skeptical that Petrobras’ new management would have the ability to significantly alter the way the company fuels domestically. This is due to the upcoming election, and the possibility of fuel shortages in the event prices continue decoupling from the global market.

However, increasing government intervention in Petrobras affairs can be a negative for corporate governance, according to analysts from Credit Suisse and UBS.

Late on Monday, the government announced it was swapping out Petrobras CEO José Mauro Coelho for Economy Ministry official Caio Mario Paes de Andrade.

A company’s bylaws allow for an extraordinary shareholders meeting. In which many board members can be replaced, this action could lead to a change of control.

Bolsonaro, who was replaced as energy minister by Petrobras after several fuel price rises by Petrobras two weeks earlier, appointed Adolfo Sasida (another high-ranking Economy Ministry official) for the role.

Nogueira stated that Petrobras’ pricing policies need to align with the new Minister. He also said that Jose Mauro Coelho, outgoing CEO of Petrobras was closer with Bento Albuquerque, former Energy and Mines Minister.

According to four sources as well as an internal presentation by Reuters, Petrobras’ management was warning the government about diesel shortages if prices in domestic markets do not match global market levels last week.