Venezuela published the price of its oil and fuel in Chinese currency on Friday in what it called an effort to free the socialist-run country from the “tyranny of the dollar,” echoing a plan recently announced by President Nicolas Maduro.
Maduro last week said his government would shun the dollar after the United States announced sanctions that blocked certain financial dealings with Venezuela on accusations that the ruling Socialist Party is undermining democracy.
The global oil industry overwhelmingly uses the dollar for pricing of products.
A weekly Oil Ministry 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 released after the bulletin.
Venezuela’s yuan-based prices appear to be the result of multiplying dollar prices by the dollar/yuan exchange rate.
The price per barrel for the week ending Friday was 306.26 yuan, equivalent to $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 $46.15 based on the corresponding exchange rate.
The ministry did not respond to an email seeking additional details.
“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 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 dollars in order to incorporate other currencies.
Late socialist leader Hugo Chavez, during his 14-year rule, repeatedly vowed to back away from the dollar, which he said was being printed indiscriminately and was destined to lose its place as the world’s dominant currency.
But Venezuela remains dependent on the greenback, given that it conducts ample commercial trade with the United States both through exports of oil and imports of U.S. food and consumer products.
Sanctions by the administration of President Donald Trump blocked U.S. citizens from buying new debt from Venezuela or its state oil company, but did not directly interrupt import and export operations.