Venezuela Looks to Crypto for Oil Sales As Sanctions Return

By Charles Kennedy - Apr 22, 2024

With Venezuelan oil sanctions set to be reimposed and state-run PDVSA oil company buyers and suppliers under orders to close out transactions in line with sanctions by the end of May, the country is now working to shift its oil sales to digital currency. 

Using Tether, pegged to the U.S. dollar, PDVSA is seeking to hasten the use of digital currency for oil export transactions to avoid having revenues from oil sales frozen in foreign bank accounts, Reuters reported on Monday, citing three unnamed sources. 

The Venezuelan state-run oil company started experimenting with Tether for oil sales in 2023. 

With the six-month temporary easing of sanctions, which expired on April 15, Venezuela had managed to increase exports to around 900,000 barrels per day in March–a four-year high, according to Reuters, which notes that PDVSA now has a requirement that new customers for oil purchases maintain a digital wallet. 

"USDT transactions, as PDVSA is demanding them to be, don't pass any trader's compliance department, so the only way to make it work is working with an intermediary," Reuters cited a trader as saying, in reference to crypto payments. 

Elections in Venezuela are scheduled for July 28, and Maduro has tirelessly worked to ban opposition candidates by using trumped-up criminal charges to keep them off the ballot, along with arresting many opposition figures for allegedly plotting a coup against him. The continuation of the temporary oil sanctions relief was conditioned upon the holding of free and fair elections, which Maduro has consistently violated. 

The reimposition of sanctions takes place amid new talks between Venezuela and Chevron to expand a joint venture with state-run PDVSA in the Orinoco Belt.  

At the same time, the reimposition of sanctions on Venezuela failed to resonate in oil markets, with prices remaining depressed despite heightened geopolitical tensions and more supply being shut out of the market.

By Charles Kennedy for Oilprice.com