Venezuela's Chavez Says Attack by U.S. Would Cause $500 Oil

By Steven Bodzin

May 15 (Bloomberg) -- Venezuelan President Hugo Chavez, whose country is the biggest oil exporter in the Americas, said crude oil would rise to "$400 or $500 a barrel" in the case of a U.S. attack.

The reactivation of the U.S. Fourth Fleet in the Caribbean on July 1 and a possible U.S. base on the Guajira Peninsula, which Venezuela shares with Colombia, are both threats to his country, Chavez said at his country's military academy in a speech broadcast on state radio and television.

Colombia has no plan to give the U.S. a base on the Guajira, EFE reported today, citing Defense Minister Juan Manuel Santos. He was responding to a Chavez speech earlier in the day about the peninsula, the Spanish-language newswire said.

Chavez, who has long criticized the U.S. role in Latin America and warned that oil could rise to $200 a barrel in the case of an attack on his country or Iran, said that given recent price increases in the crude market, his estimate was too low.

"Now we're at $120 and it's continuing up," he said. "If there's a war against Venezuela, with the oil in this soil, it won't depart from the Venezuelans, it won't go to anyone."

Crude oil for June delivery fell as much as 68 cents, or 0.6 percent, to $123.54 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $123.86 a barrel at 12:22 a.m. Caracas time. Yesterday, oil fell $1.58, or 1.3 percent, to settle at $124.22 a barrel.

That was the first time in eight days that oil didn't reach a record. The contract rose to an all-time high of $126.98 a barrel on May 13. Prices are 96 percent higher than a year ago.

Venezuela will launch its first missile from a Sukhoil jet fighter in the next week in a maritime exercise, Chavez said, after criticizing the rededication of the Fourth Fleet. The country is also buying light, fast tanks and training citizens in a reserve force to defend the country against possible threats, he said.