Venezuela’s state-owned oil company PDVSA is set to ramp up the use of digital currencies in its crude and fuel exports as the United States reinstates oil sanctions on the country, a report by Reuters said.
Last week, the U.S. Treasury Department issued a deadline of May 31 for PDVSA’s customers and providers to conclude transactions under a general license that was not renewed due to a lack of electoral reforms. This move is expected to pose challenges for Venezuela’s efforts to boost oil production and exports, as companies will now require individual U.S. authorizations to engage in business with the South American nation.
PDVSA has been gradually transitioning its oil sales to USDT, a digital currency commonly known as Tether, since last year. The resurgence of oil sanctions is accelerating this shift, aimed at mitigating the risk of sale proceeds being frozen in foreign bank accounts due to the imposed measures.
Venezuelan Oil Minister Pedro Tellechea revealed to Reuters last week that digital currencies may become the preferred payment method in some contracts. Despite the global preference for transactions in U.S. dollars in the oil market, the use of cryptocurrencies in payments remains relatively uncommon.
PDVSA’s oil exports have surged under Tellechea’s leadership, reaching approximately 900,000 barrels per day in March, the highest level in four years. To adapt to the changing landscape, PDVSA has shifted many spot oil deals to a contract model that mandates prepayment for half of each cargo’s value in USDT.
Additionally, PDVSA now requires new customers seeking to conduct oil transactions to possess cryptocurrency in a digital wallet, a requirement enforced even in existing contracts that do not explicitly mention the use of USDT.
While the reliance on intermediaries for transactions may assist PDVSA in circumventing sanctions, it will likely result in a smaller share of oil proceeds flowing into the company’s coffers.
Minister Tellechea remains optimistic about Venezuela’s ability to navigate the challenges posed by the return of U.S. sanctions, emphasizing PDVSA’s strength in trading and its preparedness to address the situation.
Analysts, however, caution that Venezuela’s oil output, exports, and revenue may soon encounter limitations, even if individual authorizations are promptly issued by Washington.
