In retaliation to US sanctions, in its latest weekly report Venezuela’s oil ministry has published prices for the country’s petroleum products in Chinese yuan, rather than US dollars. One barrel of Venezuelan oil will now cost buyers CNY 306.26 – equivalent to USD 46.76.
Venezuela has the largest proven oil reserves in the world, at 300 billion barrels. The oft-touted “king of oil,” Saudi Arabia, has only 266 billion barrels.
In a press statement, the ministry said that the move to price oil in yuan was to rid itself of the “tyranny of the dollar.”
“This format is the result of the announcement made on September 7th by the President…that Venezuela will implement new strategies to free the country from the tyranny of the dollar,” the statement says.
According to Vice President Tareck El Aissami, Venezuela will also insist that any companies doing business with the state must transact in a non-dollar currency.
The government of President Maduro has been angered by sanctions imposed upon it by the US, who believe that the South American nation is subverting democracy.
US sanctions have targeted current and former Venezuelan government officials, including President Maduro personally, as well as Venezuela’s oil industry.
Despite mass protests against the government by Venezuelans, who suffer amid the country’s worst economic crisis in decades, President Maduro has so far refused to call an early election. Instead, the President has chosen to form a ‘Constituent Assembly’ that has the power to set new laws and generally out-muscle the country’s elected congress, which since 2015 has been dominated by Venezuela’s opposition parties.
“Maduro now enjoys wide-ranging influence over every branch of government,” says NPR’s Colin Dwyer.
Venezuela is battling serious food and power shortages and inflation levels above 700%. A decade ago it was the richest country in South America.
Venezuela is not the first country to make attempts to move away from US currency, and is unlikely to be the last.
Russian president Vladimir Putin has long been a critic of the dollar’s dominance in world trade and in an effort to ‘de-dollarise’, in 2014 the Russian Treasury announced plans to promote ruble denominated oil and gas contracts. Then in the same year, in what was dubbed the “deal of the century,” Russia’s Gazprom and China’s CNPC struck a thirty-year deal for the sale of $400 billion worth of natural gas, to be paid for in rubles and yuan.
More recently, in 2017, China has signed currency swap agreements with Canada and Qatar.
Expressing his dissatisfaction with a dollar driven world, Kazakhstan’s president, Nursultan Nazarbayev, said at this year’s Astana Economic Forum that it was “time to consider the introduction of a global payment unit…[that would] save the world from currency wars, speculation, avoid distortions in trade relations, and reduce volatility in the markets.”
“It may only be a matter of time before other OPEC countries sign [non-dollar deals] with China,” thinks Telesur’s Mision Verdad.