Venezuelan President Hugo Chavez is famed for his incendiary oratory. But in his recent threats to cut off oil shipments to the U.S., a move he says could propel world prices to $200 a barrel, he's probably blowing smoke, not fire. The U.S., after all, is the No. 1 market for Venezuela's oil exports. More important, the U.S. is home to refineries specially equipped to handle Venezuela's brand of heavy, high-sulfur crude. Finding other customers for the country's oil in a hurry would hardly be a cinch.
"This threat could backfire for Venezuela and Chavez," says Pietro Pitts, a Caracas-based oil analyst who publishes Latin Petroleum magazine. "Any embargo would hurt Venezuela far more than the U.S. Venezuela supplies about 11% of U.S. oil, but the U.S. accounts for the bulk of Venezuelan oil exports."