Contributor Over At Oilprice.Com -- Nominee for 2018 Geico Rock Award? -- June 6, 2018

Mr Cunningham is coming very, very close to being nominated for the 2018 Geico Rock Award. I think anyone following the Venezuela story knew the country and its oil sector were imploding. So, now, we get this headline (Venezuela’s Oil Meltdown Defies Belief) from oilprice.com and the story from Nick Cunningham:

Venezuela might have to declare force majeure on its oil exports as production plunges and its ports are unable to ship enough crude.

The ongoing meltdown in Venezuela’s oil sector could tighten the oil market more than expected.

Reuters reported Tuesday that Venezuela is considering declaring force majeure, a legal declaration made in extraordinary circumstances to basically get out of contractual obligations.

In other words, Venezuela’s PDVSA is essentially prepared to say that it can’t supply the oil that it promised. The utter collapse of the country’s oil production is obviously a big factor in PDVSA’s inability to ship enough oil.

Output is down below 1.5 million barrels per day and falling fast. But the tanker traffic at a handful of its ports has created unexpected bottlenecks, which have slowed loadings.

Clogged ports are the direct result of the seizure of operations on several Caribbean islands by ConocoPhillips last month. The American oil major sought to enforce an arbitration award, laying claim to a series of storage facilities on the islands of Bonaire, Curacao and Aruba.

I think folks have been suggesting for over a year that the Venezuelan oil industry was headed for a meltdown. What is going on now should hardly be a surprise. Happening faster than expected? It seems like the train wreck has been going on for a year or more.

I suggested yesterday that Venezuela's failure to meet oil contracts might be a bigger story than folks realized seems to be accurate. And yet, to the best of my knowledge, the story was hardly covered on CNBC.