Venezuela nut-case and president-for-life Hugo Chavez says no more oil for Uncle Sam. American’s most profitable company, Exxon (NYSE: XOM), has court cases pending to try to get reparations for assets taken from it in the South American country.
According to The Associated Press "Exxon Mobil has gone after the assets of Venezuela’s state oil company, Petroleos de Venezuela SA, in U.S., British and Dutch courts as it challenges the nationalization of a multibillion dollar oil project by Chavez’s government last year."
Chavez characterizes Exxon management as "outlaws". Whether that is true or not, it appears that taking the company’s assets without compensation is against international law.
Chavez also claims that if he stops shipping oil to the US, the price per barrel for crude will rise to $200. If no other countries move to temporarily ease the situation, that could happen. But it is hard to imagine that OPEC would allow the situation to spin out of control and trigger a worldwide panic. OPEC will do what it can to be helpful if only for PR purposes.
Chavez will find out quickly enough that his country is likely to be hurt more than the US is if he halts exports. His economy requires the level of oil sales to remain constant for it to stay even modestly prosperous. Cutting off oil to the US would be cutting his own throat.
Douglas A. McIntyre
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