Venezuela Shifts Oil Sales to USDT Amid Sanctions

Due to U.S. sanctions on Venezuela, state-owned oil company PDVSA is promoting the use of digital currencies like USDT for crude sale.

As a result of the tightening of sanctions imposed by the United States on Venezuela, the state-owned oil corporation PDVSA has reportedly increased the number of efforts it is making to promote the usage of digital currencies and stablecoins such as Tether (USDT) for the purpose of exporting crude and fuel.

Venezuela PDVSA Mulls Use of Tether USDT

The United States Treasury Department requested last week that all PDVSA clients and providers cease all transactions until the 31st of May.

As a result, it will be more challenging for Venezuela to increase its oil production and exports because businesses will have to wait for specific authorizations from the United States before they can conduct business with Venezuela.

Beginning in the previous year, PDVSA has been steadily shifting its oil sales to USDT, which is Tether’s own stablecoin that is tethered to the US dollar. The US dollar’s value determines the value of USDT, ensuring stability.

According to people who are familiar with the situation, the reintroduction of oil sanctions is hastening this change. The purpose of this move is to reduce the possibility that revenues from sales may be seized from bank accounts located in other countries as a result of these sanctions.

Pedro Tellechea, Venezuela’s Minister of Oil stated to Reuters the previous week that the country is considering using digital currencies as the preferred mode of payment for certain oil contracts.

He added that we use a variety of currencies and that these currencies are determined by the terms of the contracts. In the global oil market, the United States dollar continues to be the predominant currency for transactions.

Payments made with cryptocurrencies are still relatively unusual, but they are becoming more prevalent in specific nations. In the previous year, PDVSA faced a corruption scandal following the discovery of approximately $21 billion in unexplained receivables from oil exports.

Previous transactions using a variety of cryptocurrencies partially contributed to this scam. After the controversy, Tellechea took control of the nation’s oil ministry.

Venezuela’s oil exports have increased significantly since Tellechea took over as president. The exports reached their highest level in four years in March, reaching approximately 900,000 barrels per day.

PDVSA Demands 50% Payment in USDT

The United States issued licenses that allowed for sales, making this possible. PDVSA made the shift to a contractual framework that required an upfront payment of 50% of the value of each shipment in USDT by the end of the first quarter of 2024.

This move applied to numerous spot oil transactions, with the exception of swaps. PDVSA also requires that each new client who wants to engage in oil transactions have cryptocurrencies stored in a digital wallet.

PDVSA enforces this requirement. According to one source, Venezuela has enforced this obligation and extended it to certain current contracts that do not explicitly mention the use of USDT.

According to one trader’s statement, “USDT transactions, as PDVSA demands, do not pass any trader’s compliance department, so the only way to make it work is to work with an intermediary.”