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Venezuela’s Cash Reserves Shoot Up From PDVSA Despite Sanctions

Nicolas Maduro

PDVSA’s sales to China just netted Venezuela a cool $700 million, increasing its reserves to $8.8 billion, two sources with direct knowledge told Bloomberg on Wednesday.

Most of the $700 million was in the form of the Chinese yuan, and comes from back payments made to PDVSA for its crude oil deliveries to China. The payments had been delayed due to the US sanctions on Venezuela and PDVSA, as both parties struggled to come up with a way to send and receive payments in the face of those sanctions.

Venezuela is having to be particularly resourceful in coming up with cash, and has also sold some crude oil for euros cash via intermediaries, three anonymous oil industry sources told Reuters last week. It has also sold gold for euros as well as it tries to make up for lost oil revenue. It took out eight tonnes of gold in April for sale abroad, according to a Reuters report.

Venezuela has seemingly abandoned the dollar trade for its crude oil for fear of running afoul of the US sanctions on the Latin American country. This push away from digital transactions will make it more difficult to track where money is coming from and where it’s going to.

Venezuela was hit hard earlier this month when Turkey’s largest bank severed ties with Venezuela’s central bank after the US levied its last round of strict sanctions, threatening to seize the US assets of anyone who does business with Venezuela or PDVSA—even foreign companies. Turkey has traditionally been a strong supporter of Nicolas Maduro. Turkey spoke out against the US sanctions, but nevertheless, its state-run bank was unwilling to risk further transactions.

But Venezuela still has some friends in Russia, China, and Cuba, which make take some of the sting out of the US sanctions.

By Julianne Geiger for Oilprice.com

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