Prompted by renewed US oil sanctions, Venezuela's state-controlled oil company PDVSA is reportedly planning to expand its utilization of digital currencies in crude oil and fuel exports, according to a report by Reuters published on Monday.

The decision comes in response to the Biden administration's refusal to renew a license easing restrictions on Venezuela's oil industry, leading to the reimposition of sanctions. These sanctions require companies to wind down transactions by May 31 under a general license, thereby complicating Venezuela's oil export operations. The move is a consequence of President Nicolas Maduro's failure to fulfill commitments made after an election deal.

Reuters revealed that PDVSA has been quietly increasing its reliance on digital currency, particularly Tether (USDT), for oil sales since last year. The objective is to circumvent frozen accounts resulting from US oil sanctions, as stated by Reuters.

Venezuelan oil minister Pedro Tellechea has affirmed the country's willingness to explore the use of various currencies, including virtual assets, in oil contracts.

Traditionally, the oil market has been dominated by the US dollar, a legacy of the "petrodollar" arrangement established in the 1970s. Consequently, oil prices are universally quoted and invoiced in US dollars, cementing its status as the standard currency for oil transactions.

Despite past corruption scandals, Venezuela's oil exports have rebounded under the stewardship of its new oil minister, Tellechea. Notably, exports surged to a four-year high of 900,000 barrels per day in March, aided by US licenses permitting sales. PDVSA has adopted a new contract model for spot oil deals to mitigate risks from potential future sanctions, requiring half the value of each cargo to be prepaid in Tether (USDT).

Furthermore, Venezuela is now reportedly mandating new customers to possess a digital wallet holding cryptocurrency for oil deals. This requirement is also being enforced on some existing contracts that did not previously stipulate the use of USDT, indicating a broader strategic shift towards digital currencies in the oil trade.

Earlier this month, authorities arrested former Vice President Tareck El Aissami, accusing him of orchestrating a scheme to embezzle funds from oil sales using cryptocurrencies. El Aissami allegedly evaded capture for a year by converting cash into cryptocurrencies, potentially transferring them to the crypto exchange Kraken. This high-profile corruption case, known as the "PDVSA-crypto incident," underscores the challenges and risks associated with the adoption of digital currencies in the oil sector.

As Venezuela navigates through the complexities of international sanctions and explores new avenues for its oil exports, the embrace of digital currencies could reshape the landscape of the global oil market.