Venezuela Key Factor to Keep Oil Prices Stable

On the verge of an armed conflict in Middle East, the South American country will play a decisive role to stabilize the oil market

Venezuela, the fifth largest world's oil exporter, will play a strategic role if finally Washington decides to attack Iraq. The South American nation is now prepared to pump over its official quota, after general strike cracked one month ago.

Venezuelan Vice President Jose Vicente Rangel said on Tuesday that the country was currently producing 3.1 million barrels of oil per day (bpd). Speaking to reporters during a visit to Brazil, Rangel said Venezuela's oil industry was returning to normal after the stoppage started Dec. 2 by foes of President Hugo Chavez.

This is of very much interest for Washington as Venezuela is the main US oil supplier and the crisis with Iraq could make prices go haywire. This week, US officials admitted that the country could sell its strategic reserves to keep the prices stable. However, if Venezuela comes back to its pre-strike levels it would not be necessary.

Rangel said since Saturday, Venezuela stopped importing fuel and has returned to refining petrol for export. "We are already producing the petrol that the country consumes, since Saturday we are not importing petrol and products are already being refined for export," Rangel said. According to Venezuelan officials, the OPEC has allowed Caracas to pump over the traditional quota of 2.82 million barrels a day. The country has installed capacity for 4 millions bpd and says now is in 3.1.

However, dissident former employees of state oil firm Petroleos de Venezuela (PDVSA), thousands of whom were fired by Chavez for their participation in the strike, say the government has only been able to restore oil production to 2.4 million bpd.

Despite the controversy on figures, it is clear that Washington will try to restore good relations with Venezuela, at least during wartime. With the above in mind, Caracas is now of strategic interest for USA, as Bush has found an unexpected crucial allied in Chavez. Venezuela's oil production is of most importance to keep markets calmed while his Army leads the military adventure in Iraq.

Hernan Etchaleco PRAVDA.Ru Argentina