Venezuelan president Chavez threatens oil at $300

15 July 2008

If you thought oil at $150 a barrel was the peak of woes, get ready for worse if Venezuelan president Hugo Chavez is to be believed. On Sunday, he spoke about a potential doubling of crude prices even as he threatened to stop oil shipments to the US if Exxon Mobil Corp succeeds again in freezing the financial accounts of Petroleos de Venezuela SA (PdvSA) overseas.

At the same time, in a bid to expand his influence over the region, Chavez touted a pact delivering fuel to Caribbean nations and loosened the financing terms to aid countries struggling with high oil prices.

"If they freeze us, there's no more oil for the United States, and the price of crude will go to $300 a barrel," Chavez said as he addressed the V PetroCaribe summit. The US oil giant "continues to try to hurt us," he said, without offering details.

In a contrast to his hostility towards the US and George Bush, Chavez said that summit participants now be required to pay just 40 per cent of the bill within 90 days, down from the current 50 per cent.

He said the rest could be paid over the next 25 years at a fixed interest rate of 1 per cent as long as oil prices are above $100 a barrel. Some PetroCaribe member countries also have the option of paying partially for oil with services or goods such as rice, bananas and sugar.

"That could compensate for the horrible curve of the jump in oil prices," Chavez said. He added that 70 per cent of payments may be deferred if oil reaches $150 a barrel.