Dec 17 (Reuters) – Foreign currency flows to Venezuela’s private sector, both in cash and cryptocurrency, could fall in the coming weeks after Washington ordered a blockade of oil tankers under sanctions, analysts and business leaders said, likely stoking inflation in the OPEC member.
U.S. President Donald Trump ordered the blockade on Tuesday, Washington’s latest move to pressure Venezuelan President Nicolas Maduro’s government by targeting its main income source.
Trump’s campaign against Maduro has included a military buildup in the region and more than two dozen strikes on boats in the Pacific and Caribbean that the U.S. says were trafficking drugs, killing at least 90 people. Trump has said repeatedly that U.S. ground attacks on Venezuela could begin soon and that Maduro should leave office, but the Venezuelan president appears to have firm military support and the backing of his cabinet and allies such as Russia.
OIL BUYERS DEMAND CONCESSIONS FROM VENEZUELA
Maduro and his government have always denied any connections to drug trafficking and say the U.S. is seeking a leadership change to take control of Venezuela’s natural resources, especially its huge crude reserves.
Venezuelan oil customers are already demanding steeper discounts and changes to spot contracts because of a vessel seizure last week, sources have told Reuters. About 80% of total exports go to Asia.
U.S. sanctions oblige companies within Venezuela seeking to buy raw materials from abroad to exchange local bolivars for dollars generated by the oil trade and foreign card transactions on exchanges run by the central bank. But uncertainty over crude shipments will hit oil revenue, reducing the supply of cash and cryptocurrency offered to industries for imports, analysts and business leaders said.
“This could be one of the strongest actions by the United States,” said economist Alejandro Grisanti.
Government allocations of foreign currency to companies were already declining. They totaled around $5 billion from January through November, down 16% from the same period in 2024, according to local analysis firms and financial sector estimates. Flows could fall further, analysts added, given the U.S. measures could affect half of oil exports.
WORRIES ABOUT DOLLAR AVAILABILITY
On Monday, the dollar and crypto supply was 6% lower than the previous week, financial sources said.
Private sector executives are worried about dollar availability in the coming days, one businessman said, requesting anonymity, though another business source said manufacturers currently have enough inventory to meet consumer demand.
The communications ministry and central bank did not respond to requests for comment. Vice President Delcy Rodriguez said on Wednesday that crude exports were continuing despite the “illegal and illegitimate blockade attempt.”
Maduro’s government has slowly begun to allow the use of dollar-tied cryptocurrencies such as USDT, known as Tether, in currency exchanges for the private sector. The change followed a U.S. license allowing Chevron to export Venezuelan crude but barring payments to Maduro’s government.
“A low supply of dollars, in any form, will pressure the exchange rate,” said another analyst, requesting anonymity. “In Venezuela’s economy, devaluation passes through to prices.”
The official exchange rate is depreciating by about 1% daily, forcing families to pay more for food, medicine and other essentials, and some worker bonuses previously paid in foreign currency are now being paid in bolivars indexed to the exchange rate, analysts said.
“Given the dependence of the local economy on imported goods, FX depreciation exhibits a rapid pass-through to inflation,” JP Morgan said in a note on Wednesday, predicting local price rises of some 420% this year.
The International Monetary Fund has estimated Venezuela’s annual inflation could end the year at 548%. The central bank has not published price data since October 2024.
(Reporting by ReutersEditing by Rod Nickel and Nick Zieminski)
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