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Chavez renews threat to cut off oil supply to US

"We're not going to avoid this supply of oil unless the US government gets a little bit crazy and tries to hurt us."

Hugo Chavez, Venezuelan president

Venezuelan President Hugo Chavez yesterday renewed a threat to halt oil supplies to the US if Washington "hurts" the Latin American country.

Relations between Venezuela, which exports the bulk of its oil to the US, and Washington have been badly strained since Chavez last month accused Washington of plotting to have him assassinated.

"If there is any aggression, there will be no oil," Chavez, who arrived in New Delhi on a four-day visit to India, told journalists, the Press Trust of India reported.

"We want to supply oil to the US. We're not going to avoid this supply of oil unless the US government gets a little bit crazy and tries to hurt us," he said after a ceremonial welcome at the Indian president's palace.

The US State Department has dismissed Chavez's accusations that Washington is seeking to have him killed as "ridiculous and untrue."

Venezuela is the world's fifth-biggest oil exporter and is among the largest providers to the US.

Asked whether the Organization of Petroleum Exporting Countries (OPEC), of which Venezuela is a member, will increase output to cool current near-record prices, Chavez said yesterday the cartel was "producing enough."

"[The] increasing price of oil has nothing to do with OPEC. It is the structure of the market," he said, adding OPEC was evaluating factors at work.

Crude futures rose slightly yesterday following Thursday's record surge of US$1.50, as active fund buying and supply fears continued to drive the market.

On the New York Mercantile Exchange, light, sweet crude for April delivery rose US$0.05 to US$53.62 a barrel.

Victor Shum, oil analyst in Singapore for Texas-based Purvin & Gertz, an energy consulting firm, said the surge in prices was "not consistent with supply and demand fundamentals."

"Although demand is strong, I don't think demand will exceed supply," he said.

The price surge was also supported by comments from OPEC official Adnan Shihab-Eldin of Kuwait, who said on Thursday that a major supply disruption could send crude prices to US$80 per barrel.

Oil prices are also up sharply in recent weeks due to fears that OPEC could rein in production at its upcoming meeting in Isfahan, Iran, on March 16.

However, recent signals from OPEC officials that the cartel is unlikely to cut production have failed to calm the market.

"It may take the OPEC meeting to break this surge in prices," Shum said.

Jitters about the OPEC meeting, cold weather and the weak dollar have contributed to the recent rise in oil prices, which are now 52 percent above year-ago levels.
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