(CARACAS) Venezuelan President Hugo Chavez stopped oil exports to Exxon Mobil Corp on Tuesday, escalating a fight with
the US company two days after threatening to cut off all supplies to America.
The retaliation for Exxon's legal offensive, which froze US$12 billion in Venezuelan assets, pushed oil prices higher.
State oil company PDVSA said it broke off commercial ties and halted the supply of crude and petroleum products to America's
largest company in a fight over Exxon's demand for compensation after Mr Chavez seized a crude project last year.
'Faced with the legal-economic harassment started by Exxon Mobil against PDVSA and as an act of reciprocity, PDVSA has
decided to suspend commercial relations,' the Venezuelan company said.
Light, sweet crude for March delivery rose 11 cents to US$92.89 a barrel on the New York Mercantile Exchange by late morning
in Europe. The contract fell 81 cents to settle at US$92.78 a barrel on Tuesday.
Oil had fallen as traders overlooked Venezuela's halt of crude sales to Exxon Mobil and instead focused on forecasts for
rising US supplies and falling global demand. Venezuela is currently the United States' fourth largest oil supplier.
Analysts said the impact of PDVSA's move on the crude market is primarily psychological and unlikely to significantly reduce
supplies.
Energy Information Administration data say that Exxon Mobil imported 2.7 million barrels of crude from Venezuela in November,
excluding supplies for a refinery at Chalmette, Louisiana, a joint venture in which PDVSA and Exxon Mobil are equal partners.
The Chalmette refinery imported about 2.3 million barrels from Venezuela in November, according to the EIA. It is not clear
how crude supplied to the facility will be affected by the cutoff in sales to Exxon Mobil.
'Most market participants, including myself, don't think that Hugo Chavez will actually go through with his threat of halting
crude sales to the US,' said Victor Shum, an analyst with Purvin & Gertz in Singapore.
'The amount they sell to the US is about half of what Venezuela produces in total, and at today's high prices, that represents
a lot of revenue.' - AP, Reuters
