Oil Industry & Russian Cryptocurrency

An oil analyst says, that the gradual acceptance of digital currencies may prompt some oil producing nations to ditch the US dollar in crude trade in favor of cryptocurrencies.

Russia, Iran and Venezuela have more than one thing in common. All three are major oil producing nations dependent on the dollar since the global crude market is traditionally dominated by contracts denominated in US currency.

US sanctions also affecting Moscow, Tehran and Caracas; penalties which are proving effective since the sanctioned countries are dependent on the US dollar to sell their crude.

Oil producing trio can turn their back on the greenback with decentralized currency, which will make anonymous transactions along with blockchain technology support to facilitate oil contracts.

“The advent of cryptocurrencies, therefore, represents a fresh catalyst for commodity-producing countries wishing to abandon the dollar as a means of payment for oil,”  an oil analyst at PVM Oil Associates Stephen Brennock reported CNBC.

Ditching the dollar in oil trading is already voiced by several oil producers. One of them is Venezuela. The country announced last week about launching its own cryptocurrency, the “Petro,” which will be backed by the country’s vast natural resource reserves.

Russia, China and Iran are currently pursuing currency swap agreements to eliminate the US dollar from trade. One of the world’s biggest crude importers, China, has also announced the launch of the petro-yuan to replace the greenback in oil transactions.

Cryptocurrencies, which becoming less volatile, offer several advantages. They provide a common currency for countries, Instead of using various national currencies, with the aim to avoid using the dollar. Also they are easily convertible, universal and flexible.

There is another advantage that provide cryptocurrencies. They are anonymous and decentralized, which limits the effect of US economic sanctions on trade deals for countries like Russia, Iran and Venezuela.

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