Venezuela’s Oil Industry Shifts to USDT Trading to Avoid American Sanctions
According to a report from Reuters, Venezuela’s state-owned oil company PDVSA plans to increase the use of USDT as a payment method for its oil exports, following the reinstatement of US sanctions on Venezuela.
Venezuela is the most important oil-producing country in South America, and oil is its economic lifeline. Since 2019, Venezuela has been subject to US oil sanctions. Prior to being sanctioned by the US, Venezuela’s oil primarily flowed to refineries along the US Gulf Coast in Mexico.
According to Reuters, PDVSA has been slowly shifting its oil sales to USDT, the world’s largest stablecoin, since last year. Insiders say the return of oil sanctions is accelerating this shift, as it can reduce the risk of sales revenue being frozen in foreign bank accounts.
Venezuelan Oil Minister Pedro Tellechea stated: “We have different currencies according to the provisions of the contracts, and in some contracts, digital currencies may be the preferred payment method.”
The US dollar has traditionally been the preferred currency for transactions in the global oil market. Although cryptocurrencies are emerging in some countries, cryptocurrency payments are not frequent.
However, in the first quarter of this year, PDVSA has converted many spot oil transactions into contract mode and requested a 50% prepayment in USDT. These transactions are carried out through intermediaries to evade scrutiny by regulatory authorities, and many of them are related to sales to China.
As the US Treasury Department’s licenses for oil and gas production in Venezuela are set to expire at the end of May, and the US is considering reimposing sanctions on Venezuela, the licenses have not been renewed. Oil analysts predict that Venezuela’s oil production, exports, and revenue will soon reach their limit.
However, Venezuelan Oil Minister Pedro Tellechea denied this claim and stated that the Venezuelan state oil company “has strong trading capabilities” and is prepared to deal with the return of Washington’s sanctions.
PDVSA, sanctions, Venezuela
