There's a big oil story flying under the radar

• Venezuela is creeping closer towards formal default.
• There's speculation that Venezuela missed its full $1.1 billion bond payment last Friday.
• President Nicolas Maduro announced his country will have to restructure future debt payments.

---

Rising tensions between Saudi Arabia and Iran, as well as the kingdom's weekend crackdown, have drawn the attention of oil watchers.

But there's another big oil story flying under the radar that should not be overlooked: Venezuela is creeping closer towards a formal default.

"We caution against taking one's eye off the looming sovereign debt crisis in Venezuela that could further curtail output from the stressed state," Helima Croft, head of commodity strategy at RBC Capital Markets, said in a note to clients.

There's speculation that Venezuela missed its full $1.1 billion payment on a bond issued by its state-oil company, PDVSA. It was due last Friday, but the Financial Times reports that "while some bondholders said they expected the money to arrive soon, others pointed out that the payment deadline had clearly been missed regardless."

And last week, President Nicolas Maduro announced Venezuela is aiming to restructure future debt payments, raising questions about the state's and its oil company's ability to make the remaining payments in 2017 and 2018.

"Any restructuring effort will be greatly complicated by the August sanctions that bar any US regulated financial institution from dealing in new debt issued by the Venezuelan government or PDVSA," Croft said.

"Compounding the challenge, the official appointed to lead the debt negotiations, Vice President Tareck El Aissami, was placed on the US Treasury Department's OFAC sanctions list for drug trafficking in February, potentially putting US regulated firms that engage with him in legal peril," she added.

Venezuela has been in a deteriorating economic and political crisis, plagued by economic mismanagement, a chronic balance of payments problem, food and essential goods shortages, and looting and violence.

Get the latest Oil WTI price here.