Venezuela will use some 30 million barrels of oil it has in storage as backing for its national cryptocurrency, the petro, Reuters reports, citing a speech by President Nicolas Maduro.
“I will deliver these 30 million of barrels as a liquid, physical, material backing for the petro,” Maduro said on Venezuelan television. “The inventories of crude and products in storage tanks are available for immediate commercialization … to sustain and back the operations of the sovereign Venezuelan crypto-asset, the petro.”
Earlier this month, Maduro said the petro had more than 27,000 “affiliated businesses” already and the number was expected to increase twofold in the next few months.
Caracas has intensified its efforts to make the petro popular recently, after its launch last year failed to yield any positive results for the Venezuelan economy. One of the reasons for that was that at the time, Venezuela said it would back the cryptocurrency with some 5 billion barrels of yet to be developed reserves of oil, which were located in a region without oil production infrastructure.
Another reason was that the United States slapped sanctions on the cryptocurrency almost as soon as it was out, crippling its chances for trading on any large crypto exchange.
It was also the sanctions that pushed oil in storage higher in Venezuela. The tightening noose around Caracas, which now involves sanctions for non-U.S. parties doing oil business with Venezuela as well, scared away some potential buyers, effectively leaving Chinese and Russian entities as partners of the Maduro government. As a result, inventories of crude rose and production had to be limited several times, Reuters noted.
Yet right now exports are rising, data from OilX and Bloomberg has shown. Most of the oil exported by Venezuela is going to China and India but a lot remains in storage as well: some 39 million barrels at end-October, per data from Kpler.