Oil strike prompts OPEC action

The Venezuelan export crisis has begun to cut into US oil supplies. Pump prices have jumped 7 cents since the strike began to $1.46 a gallon, 26 cents from the highest recorded national average price, and the US has not opened its emergency oil reserve. An ongoing strike against President Hugo Chavez that began on Dec. 2 has cut off supplies from Venezuela, which supplies 13% of US gasoline imports.

The Venezuelan export crisis has begun to cut into US oil supplies. Pump prices have jumped 7 cents since the strike began to $1.46 a gallon, 26 cents from the highest recorded national average price, and the US has not opened its emergency oil reserve. An ongoing strike against President Hugo Chavez that began on Dec. 2 has cut off supplies from Venezuela, which supplies 13% of US gasoline imports.

OPEC called an extraordinary ministerial meeting for Jan. 12 at its headquarters in Vienna, three months earlier than its previously scheduled March 11 meeting, where it is expected to raise output to counter the supply shortage.

The strike has paralyzed Venezuela's oil industry, cutting deliveries by 80% and exhausting US stockpiles to near 26-year lows. But Chavez says Venezuela is importing 40-50 workers from India and the Philippines to break the national strike and increase production. This is in line with the president's plan to form the Group of Nation Friends, which would involve Organization of Petroleum Exporting Countries or increase cooperation with Latin American state oil companies and create a new company called Petro-America.

Chavez says Venezuela is now producing 800,000 b/d of crude, up from 200,000 b/d at the lowest point of the strike. He expects to recover to full capacity of 3 MMb/d by mid March. However, striking employees of state-owned oil company Petroleos de Venezuela SA (Pdvsa) believe production is at 190,000 b/d, and no more than 10 oil tankers, compared to 50 per month pre-strike, have left Venezuela since the strike began Dec. 2.

Chavez is also considering splitting Pdvsa in two – eastern and western divisions run by local managers – so as to rid the company of dissident managers and break up the strike.

Protesters are setting their sights on a Feb. 2 referendum scheduled by electoral authorities to vote on Chavez's involuntarily resignation. However, the poll is unconstitutional, and Chavez, whose 6-year term ends in 2007, has said he will ignore the results. The president says that, according to the constitution, his opposition must wait until halfway through his term, which is in August, before holding a binding referendum on his rule.

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