Venezuela to Sell Oil Using Crypto-currency to Avoid US Sanctions

Venezuela is planning to sell its oil using crypto-currency to bypass the reinstatement of US sanctions. With the six-month GL 44 exporting license granted by the US to PDVSA (Venezuela’s state-owned oil company) expiring on May 31, the Venezuelan regime is now seeking solutions to maintain its oil exports. Consequently, PDVSA is considering the use of the cryptocurrency Tether (USDT), a stablecoin pegged to the dollar, according to the press agency Reuters.

In October 2023, the US had lifted sanctions on PDVSA, allowing the resumption of business between the oil company and foreign customers, notably the major US company Chevron. However, the Biden administration quickly reversed this opening towards the Venezuelan government as the Maduro regime began a campaign of repression against the political opposition in the country.

Crypto to the rescue of oil exports

Once one of the world’s leading oil exporters, the Venezuelan oil industry has greatly suffered from the economic crisis of the late 2010s and subsequent US economic sanctions. While the country exported over 2 million barrels a day at its peak, exports fell to around 400,000 barrels per day in 2021. The lifting of sanctions allowed Venezuelan production to increase to 900,000 barrels per day in March this year.

To avoid a new collapse of oil production, Venezuelan authorities are increasingly turning to crypto-currencies. Untraceable, these allow PDVSA’s clients to continue their purchases while avoiding US sanctions. PDVSA is now shifting its transactions to stablecoins, a type of crypto-currency pegged to the dollar, ensuring a stable value, unlike crypto-currencies such as Bitcoin or Ethereum.

US sanctions on Venezuela seen from Colombia

The return of US sanctions could impact Colombia, as Ecopetrol, the Colombian state oil company, was planning to invest in oil and gas projects in Venezuela. Similarly, Colombia was studying the import of Venezuelan gas through a partnership with PDVSA. This move was motivated by the decline in oil and gas production in Colombia, which poses severe threats to Colombian energy independence.