Poor Oil States Struggle to Repay Loans to Commodity Traders

Some of the world’s poorest oil-producing countries are slipping behind on payments for billions of dollars in oil-for-cash loans from commodity trading houses, putting them at risk of default, Bloomberg News reported. The so-called prepayment deals, in which a trading house advances a nation money to be repaid with future oil shipments, have been popular among some African and Middle East oil nations as the only way to raise funds. But they have also proved controversial: in some cases they create an opaque source of debt that governments find hard to pay back when oil prices plunge. The Kurdistan region of northern Iraq is now struggling to repay a $500 million loan from commodity giant Glencore Plc, according to documents reviewed by Bloomberg News. Glencore and rival trader Trafigura Group Ltd. are also in talks to restructure oil-for-cash loans of about $1.5 billion with the Republic of Congo, according to people familiar with the matter. Read more