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Chavez threatens EU with oil boycott

Venezuelan president Hugo Chavez has fuelled the growing rift between Opec oil-producing nations ahead of a major summit this weekend, by threatening to block supplies to European countries.

Meanwhile Iran, also a major oil producer, said pumping more oil would do nothing to stop the surge in prices, after Saudi Arabia revealed that it may be increasing its production again.

As angry protests broke out in China over a sharp rise in its fuel prices today, Chavez said he was enraged by new rules passed by the EU parliament on Wednesday, aimed at standardising the process by which member nations deport illegal immigrants. They contain contentious measures such as providing for long detention periods.

In a televised speech, Chavez said: "Our oil shouldn't go to those countries" in Europe who apply new rules for deporting illegal immigrants. He also threatened to block European investments in his country. Venezuela sells most of its oil to the US and is a minor supplier to Europe.

Last month Saudi Arabia promised to produce another 300,000 barrels a day, but other oil producers within Opec are split over the need to pump more oil. Venezuela and Iran have pointed the finger at the West for failing to act against financial speculators, and the weak US dollar.

"Increased oil production does not have such an impact that it would decrease prices because enough oil exists in the global market," Iranian oil minister Gholam Hossein Nozari said today. "Just compare 300,000 barrels per day with about 86m, which the markets need. What would be the effect?"

Iran has already said it would oppose any unilateral increase in production by the Saudis. And on Tuesday, Iranian president Mahmoud Ahmadinejad said that the rise in the oil price was "fake and imposed".

A statement posted yesterday on the website of the Saudi embassy in London suggested the kingdom would boost its daily oil output by another 200,000 barrels. The statement was later withdrawn from the website but not officially denied.

This came ahead of an unprecedented meeting of producers and users in Saudi Arabia this weekend - an attempt to find a solution to the volatile price of oil, which has more than doubled in the last year. But with little apparent consensus, Gordon Brown has already been warned the summit could propel the cost of energy higher.

The oil price, which hit a new all-time high of nearly $140 a barrel this week, fell to $132 a barrel today after China suddenly slashed its subsidies, pushing up the cost of petrol and diesel by 18% in an attempt to reduce demand.

The fast-growing Chinese economy has been blamed for pushing up demand for oil. Yesterday's decision to slash fuel subsidies shocked the country's drivers. According to local reports many rushed to fuel stations to fill up only to find that sales were suspended until the price rises came through. At some stations, police were drafted in to control the situation.

There has also been anger in many European countries over the high cost of petrol and fuel. In the UK, lorry drivers have held several protests, while in Spain a strike held by truck drivers caused serious disruption this month.

But European countries appear as divided as Opec members over the best solution. Oil was high on the agenda of a two-day meeting that began yesterday in Brussels.

There appeared to be little support for French president Nicolas Sarkozy's proposal of a EU-wide cut in fuel tax. Finnish prime minster Matti Vanhanen said a tax cut would not help address the imbalance between supply and demand.

Italy is planning to hit its oil companies with a windfall tax that will fund subsidies for poorer families a move from which other countries have shrunk so


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Added: Jun-20-2008 
By: PiRaTeCoPy
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Iran, News
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