The backwardation situation in Brent…
A major change in oil…
As Venezuela drowns in debt and takes its state-run oil company, PDVSA, down with it, Reuters is reporting that BP has over 2 million barrels of oil stuck at a terminal in the Caribbean over unpaid bills.
The cargo of 2 million barrels of U.S. light sweet crude sold by BP cannot be discharged at the PDVSA terminal in Curacao until it’s paid for, according to the news agency, which is relying on unnamed sources and Thomson Reuters vessel tracking data.
China Oil and BP reportedly have a tender from PDVSA for the shipment of 8 million barrels of WTI crude for the second quarter of 2016.
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PDVSA is struggling to pay its bill as the Venezuelan economy crumbles and unrest becomes riotous. Last week, reports emerged that PDVSA was offering service providers a debt-swap deal in exchange for payments.
A subsidiary of PDVSA has reportedly offered service contractors a deal in which US$2.5 billion in debt would be swapped for dollar bonds, according to the Wall Street Journal.
Venezuela is running out of most basic consumer items as the crisis worsens.
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According to the New York Times, power shortages are now so severe that government offices are open only two days a week.
The country’s oil revenues could fall by 40 percent this year, according to NYT, and imports have been slashed to avoid default.
Over the weekend, two major international airlines Lufthansa and LATAM moved to suspend service to the country in the coming months.
By Charles Kennedy of Oilprice.com
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Charles is a writer for Oilprice.com