Venezuela on Friday published the price of its oil and fuel in Chinese currency, in what it called an effort to free the socialist-run country from the “tyranny of the dollar,” echoing a plan recently announced by Venezuelan President Nicolas Maduro.
Maduro last week said his government would shun the US dollar after the US announced sanctions that blocked certain financial dealings with Venezuela on accusations that the ruling Venezuelan Socialist Party is undermining democracy.
The global oil industry overwhelmingly uses the US dollar to price products.
A weekly Venezuelan Ministry of Petroleum and Mining bulletin published on Friday listed September prices in yuan, while including prices from previous weeks and months in dollars.
“This format is the result of the announcement made on Sept. 7 by the president ... that Venezuela will implement new strategies to free the country from the tyranny of the dollar,” the ministry wrote in a statement.
Venezuela’s yuan-based prices appear to be the result of multiplying US dollar prices by the US dollar/yuan exchange rate.
The price per barrel for the week ending on Friday was 306.26 yuan, equivalent to US$46.76 based on the exchange rate listed in a footnote. That is up from the previous week’s price of 300.91 yuan, or US$46.15 based on the corresponding exchange rate.
“Nobody is changing contracts for now,” said one oil trader consulted about the issue who asked not to be identified.
“Oil is a commodity that is traded almost exclusive in dollars. PDVSA’s [Petroleos de Venezuela SA] debts, for example, are still denominated in dollars ... and that’s how they’ll have to pay bondholders,” the trader said, referring to the state oil company.
Venezuela’s Dicom currency system on Wednesday temporarily suspended the sale of US dollar in order to incorporate other currencies.
Sanctions by US President Donald Trump’s administration has blocked US citizens from buying new debt from Venezuela or its state oil company, but does not directly interrupt import and export operations.
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