This can be described as the battle between nationalization and privatization, between national interest and transnational authority, oil supplier’s countries and the non-oil suppliers and Venezuelan pride and US hegemony. While rising oil prices is feeding the inflationary forces of the US economy, the recent announcement by Venezuela to stop selling crude to Exxon Mobil Corp. might bring more difficulties to the US economy on the verge of an impending recession. Exxon Mobil has moved a British court against the Venezuela government’s move on nationalization of one of its four heavy oil projects in the Orinoco River basin. The British court has issued an injunction temporarily freezing $12 billion worth assets of the Venezuela state run Petroleos de Venezuela SA (PDVSA). As a retaliatory measure, Venezuela has decided to stop oil supply too Exxon Mobil.

With Venezuela being the fourth largest supplier of oil to US, its decision to cut oil supply to Exxon Mobil might cause rise of crude prices in the US. However, Venezuela itself will also be adversely affected by the decision of President Hugo Chavez since the Venezuelan economy is heavily dependent on US oil exports. In the end, it will be the common citizens who will be the main losers in the commercial strife between the two countries.

Image Credit: Geelongadvertiser

Source: CNN