– Venezuelan President Hugo Chávez says oil would shoot to $200 a barrel if the US invaded Iran. He and Iranian president Mahmoud Ahmadinejad are "united like a single fist," Mr. Chávez said earlier this week.
Does Chávez, with or without Iran's help, have the power to push oil to $200 a barrel? Can he "tip the world into a recession" as an opinion piece in the Los Angeles Times asserted last week?
Venezuela is the fourth-largest supplier of oil to the US. But despite a concern among some economists that high oil prices will provoke recession, many analysts say that Chávez alone has minimal impact on the how high the price of oil goes. And even as he looks to export oil elsewhere and reduce his dependence on the US, where half of Venezuela's production is sold, it's a swap he won't be able to carry out soon.
"Between those two countries, Venezuela is way more dependent on the US than the US is on Venezuela," says Roger Tissot, director for Latin America country strategies at PFC Energy, a consulting group.
Chávez's latest threats came during the Organization of Petroleum Exporting Countries (OPEC) summit last weekend in Saudi Arabia, as he and Mr. Ahmadinejad sought to push OPEC away from trading in the US dollar.
"God willing, with the fall of the dollar, the deviant US imperialism will fall as soon as possible, too," said Chávez, in a visit to Tehran after the OPEC meeting, according to the state news agency in Iran.
But the intent was rejected by Saudi Arabia, the world's largest oil exporter. Saudi King Abdullah remarked that oil "should not become a tool for conflict and emotions."
Chávez also called on OPEC to take on a greater social mission – not unlike his own acts in Venezuela.
In many ways, the OPEC comments – impassioned rhetoric followed by little, if any, action – reflect the larger dynamic between Venezuela and the US. Chávez has often threatened to cut off supplies to the US if it invades his country or Iran.
"He is still selling a million barrels of oil a day to the US; for certain technical and logistic reasons, it would be difficult to divert that market to other markets," says Daniel Erikson at the Inter-American Dialogue in Washington. Shipping its oil farther away would be expensive, and only certain refineries can handle its heavy crude. "There is an unbreakable logic that supports Venezuela selling its oil to the US," he says.
Mr. Tissot says that during the Venezuela oil strike in 2002-03, its economy was devastated while the US remained stable. Even in a scenario in which Chávez was able to stop selling oil to the US, Tissot says that the US would find alternative suppliers – and in the end, that could even ease the tensions between Washington and Caracas. "If they send less oil to the US," he says, "the more irrelevant they become."
But Rafael Quiros Serrano, an oil economist and professor at the Central University of Venezuela, disagrees. He says demand is much higher than supply. "For Venezuela, it's much easier to find another client than for the US to find another supplier," he says.
• Daniel Cancel in Caracas contributed.