According to a Reuters report, as the United States re-imposes oil sanctions on Venezuela, its state-owned oil company PDVSA plans to increase the use of USDT as a payment method for its crude oil exports.
Venezuela is the most important oil-producing country in South America, and oil is also the lifeblood of Venezuela's economy. Venezuela has been under U.S. oil sanctions since 2019. Before being sanctioned by the United States, Venezuelan crude oil flowed mainly to refineries on the U.S. Gulf Coast.
According to Reuters, PDVSA has been slowly shifting oil sales to USDT, the world’s largest U.S. dollar stablecoin, since last year. The return of oil sanctions is hastening the shift by reducing the risk of sales revenue being frozen in foreign bank accounts, people familiar with the matter said.
Venezuelan Oil Minister Pedro Tellechea said:
We have different currencies based on what is stipulated in the contract. In some contracts, digital currency may be the preferred payment method.
The U.S. dollar has long been the currency of choice for trading in global oil markets. Although cryptocurrencies are on the rise in some countries, cryptocurrency payments are infrequent.
However, at the end of the first quarter of this year, PDVSA has converted many spot oil transactions to contract mode and requires half of the payment in USDT upfront.
These transactions were all conducted through intermediaries to avoid inspections by compliance departments, and many of them were related to sales in China.
With the U.S. Treasury Department license allowing oil and gas production set to expire at the end of May and currently not being renewed as the U.S. considers reimposing sanctions on Venezuela, oil analysts expect Venezuela's oil production, exports and revenue to decline. The upper limit will be reached soon.
However, Venezuelan Oil Minister Pedro Tellechea denied this statement and said that Venezuela's state oil company "has great strength in trade" and is prepared to deal with the return of Washington's sanctions commercially.
