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ING Chief Economist Calls for Further Rate Cuts in China

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China's consumer inflation was lower…

Venezuela Oil Minister Resigns Amid PDVSA Corruption Probe

Tareck El Aissami, Venezuela’s oil minister for three years, has resigned amid a corruption probe into state oil company PDVSA, Reuters has reported, noting six arrests have already been made.

The probe, which also covers the judiciary, has so far resulted in the arrests of two judges, a mayor, and three high-level government officials, the report noted, citing Venezuelan media and unnamed sources.

According to the same sources, some 20 PDVSA officials have also been placed under arrest in the past few days. These arrests are likely to have been made in relation to the investigation of oil cargoes that have been leaving the country without payments being made to the company, the Reuters sources said.

The Venezuelan state oil company suffered hefty losses because of those unpaid for cargoes and the affair led to a freeze of oil supply contracts early this year when the new head of the company, Pedro Rafael Tellechea, came into office.

At the time, Reuters reported that the payment problems have arisen because PDVSA has been forced to use the services of small middlemen companies to ship its oil abroad because of U.S. sanctions. These handle most of the shipments of Venezuelan crude abroad, but some is traded by three Western companies: Chevron, Eni, and Repsol, which were all granted a sanction waiver to do that.

Meanwhile, Venezuela’s oil industry, crippled as it is by U.S. sanctions, remains a big earner. In fact, Caracas said it expected income from oil exports to finance as much as 65 percent of the state budget for this year.

More specifically, the Venezuelan government has stipulated a budget of $14.7 billion for this year, of which $9.34 billion should come from PDVSA—up 14 percent from 2022. With current prices, this is quite unlikely to happen, so Venezuela would either have to boost production or hope prices start climbing again.

By Charles Kennedy for Oilprice.com

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