Venezuela Switches Oil Trading for Stablecoins Due to Sanctions

Against U.S. authorities reimposing sanctions on Venezuela, representatives of the country’s oil industry are accelerating the transition to settling contracts in stablecoins.

Reuters, citing knowledgeable sources, reports that PDVSA, Venezuela’s state-owned oil and gas company and the country’s largest enterprise, will increase the use of digital currencies in crude oil and fuel exports.

The situation was influenced by the U.S. Treasury Department’s decision to impose sanctions on Venezuela. As a result, U.S. companies operating in the country will have to obtain individual authorizations from the regulator. Restrictions are planned to be introduced on June 1, 2024.

It’s worth noting that in March, oil exports from Venezuela reached about 900,000 barrels per day, the highest in the last four years. In February 2024, the cost of a barrel of Venezuelan oil was estimated at $67.26. Thus, the total monthly value of oil exports from the country slightly exceeds $1.8 billion. The total USDT money supply exceeds 109 billion.

According to Reuters, by the end of Q1 2024, PDVSA already converted many spot oil transactions that don’t involve swaps to a contractual model that requires prepayment for half of the USDT value of each cargo. Under these circumstances, companies involved in oil transactions resorted to intermediaries, making it difficult to track transactions.

PDVSA reps started using USDT in oil trading last year. The current situation will only accelerate the introduction of stablecoins in fuel transactions, as it reduces risks for all parties. Pedro Tellechea, Venezuela’s Oil Minister, commented that different currencies are used in contracting, but digital assets may become the preferred settlement means in the foreseeable future.

Cryptocurrencies are actively used in Venezuela, and not only at the state level. In particular, 92.5% of crypto users in the country prefer stablecoins, a record among all Latin American countries.

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