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Venezuela’s state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), is turning to crypto for its oil trades in response to renewed US sanctions that target the nation’s oil and gas industry, Reuters reported on Tuesday.
As noted, PDVSA has been utilizing the stablecoin Tether (USDT) for oil exports since the previous year. By the end of the first quarter of 2024, the company had successfully transitioned many of its spot transactions to contracts that require prepayment in USDT, and it now mandates that new customers make payments through 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,” a trader explained.
This strategic move comes on the heels of the Biden administration’s decision to reimpose sanctions on Venezuela’s oil and gas industry last week. The sanctions were reintroduced after President Nicolás Maduro’s government failed to adhere to the terms of an agreement signed in Barbados in October 2023, which was intended to set Venezuela on a course to hold a competitive presidential election in 2024.
The Maduro administration has intensified its crackdown on political adversaries, including the disqualification of prominent opposition candidate María Corina Machado.
The US initially imposed severe sanctions on Venezuela’s oil sector following President Maduro’s 2018 re-election, which was recognized as illegitimate by the US and several other Western nations.
However, the Biden administration relaxed these sanctions in October last year following a deal between the Venezuelan government and opposition parties regarding the 2024 election.
During the six-month period when sanctions were lifted, Venezuela managed to boost its oil exports to nearly 900,000 barrels per day, with the majority going to China and a significant portion to the US.
USDT has become one of the most popular methods to skirt sanctions. According to a recent report from the US Department of Treasury, Russia has increasingly shifted to alternative payment methods, including USDT, to evade sanctions.
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