How have Venezuela’s oil revenues and production affected the bolívar’s exchange rate?
Executive summary
Venezuela’s oil revenues remain central to the bolívar’s fate: PDVSA and hydrocarbon receipts supplied roughly half of the 2025 budget and PDVSA reported about $17.5 billion in hydrocarbon export revenues in 2024, even as oil output and prices have fluctuated [1] [2]. When oil export inflows fall or are diverted to debt and subsidies, dollar availability tightens, the central bank monetizes deficits and the bolívar depreciates sharply — official rates moved from about 45 VES/USD in late 2024 to more than 100 VES/USD in mid‑2025, with parallel markets far weaker [1] [3] [4].
1. Oil is the treasury’s valve — and it’s been leaky
Venezuela’s state oil company, PDVSA, remains the government’s main source of foreign exchange and fiscal funding: PDVSA income covered roughly 53% of government spending needs in the 2025 budget and the firm reported $17.5 billion in hydrocarbon export revenues in 2024 [1] [2]. That concentration means swings in production volumes, export destinations and price realizations feed directly into the central bank’s dollar stock and the government’s ability to meet imports, service debt and avoid printing money [5] [2].
2. Production and export disruptions tighten dollar supply
Multiple sources show that lower production, sanctions, redirected sales and discounted prices reduce the hard‑currency inflow even when barrels are exported. Reporting and analysis note U.S. measures and changing buyers have pushed Venezuela to sell at lower prices or accept non‑traditional terms, constraining available dollars domestically [6] [2]. When dollars are scarcer, the black‑market premium widens and pressure mounts on the official exchange system [6] [3].
3. Policy choices convert oil receipts into inflationary pressure
Academic and policy analysis identify a central mechanism: oil income concentrated in state hands plus tight capital controls enable the government to maintain an official exchange rate divorced from market reality; when fiscal deficits widen, the central bank monetizes them and the bolívar depreciates [7] [8]. A shift in 2024–25 toward more orthodox measures temporarily improved indicators, but later moves — including allowing the bolívar to float in October 2024 — produced sharp official devaluations and higher inflation as monetary financing persisted [1] [4].
4. Official rates, floating and parallel markets — the gap matters
The bolívar’s official trajectory has been volatile: Reuters noted the currency slid to about 45 per dollar after mid‑October 2024’s partial float and later official figures exceeded 100 VES/USD by mid‑2025 and surpassed 200 in October 2025, with parallel markets often showing worse outcomes [1] [3]. That divergence reflects policy‑driven distortions — foreign exchange restrictions and state allocation of oil dollars — as identified in IMF research that links oil income concentration to persistent official–parallel gaps [7].
5. Quantities vs. prices — both drive the exchange rate
Scholars and journalists emphasize that it is not only how many barrels are produced but at what price and to whom they are sold. Even when exports rose to roughly 800,000 bpd in 2024, sanctions, discounts and redirected sales lowered net hard‑currency receipts and left the treasury vulnerable [2]. Analytical work shows oil price shocks and productivity declines jointly determine the real exchange rate; reliance on oil amplifies volatility [7].
6. Competing narratives and reporting limits
Some reporting frames a partial recovery — higher production and revenues in 2024 boosted fiscal space — while other sources warn renewed depreciation and hyperinflationary risks in 2025 as fiscal deficits and monetary financing reappear [2] [9] [6]. Available sources do not mention specific central bank balance‑sheet entries or a comprehensive monthly tally of PDVSA dollar inflows and their fiscal uses; those gaps limit precise attribution between oil receipts and daily exchange‑rate moves [7] [5].
7. What to watch next — indicators that will move the bolívar
Watch PDVSA export volumes and dollar‑denominated revenues, sanctions or license changes that alter buyers or pricing, central bank sales of FX, and fiscal deficits that force monetary financing; these are the mechanisms that have historically shifted the bolívar [2] [5] [8]. If oil revenues rise and are remitted as dollars and not monetized domestically, the bolívar could stabilize; if revenues fall or are absorbed by debt and subsidies, depreciation will accelerate [6] [1].
Limitations: This analysis relies solely on the provided reporting and academic work; detailed, up‑to‑date central bank transaction records and PDVSA’s real‑time cash‑flow accounts are not available in the supplied sources and are therefore not assessed here [5] [2].