Venezuela's announcement that it was freezing diplomatic relations with the United States came as a response to the U.S. State Department's sanctions against Venezuela's state-owned giant oil company Petroleos de Venezuela (PDVSA) for providing Iran with gasoline and other refined oil products. Diplomatic relations were already severed, as the two countries have been without ambassadors since 2010. Venezuela's President Hugo Chavez vetoed Larry Palmer, who had been appointed as the U.S. ambassador to Venezuela, because of statements Palmer made about low morale in the Venezuelan military and his concerns regarding Colombian FARC rebels finding refuge on Venezuelan soil. Later, Washington revoked the diplomatic visa to Venezuela's envoy Bernardo Alvarez.

Despite U.S. sanctions, Venezuela's Energy Minister Rafael Ramirez, who is also the head of PDVSA, said that Venezuela would continue to maintain relations with Iran and any other country it wants. The Iranian ambassador to Caracas, Abdolreza Mesri, congratulated the Venezuelan government for its firm position against Washington, saying, "Chavez vigorously challenged U.S. interests in Venezuela through his opposition to U.S. unilateralism and support for the concept of a multi-polar world." Iranian President Mahmoud Ahmadinejad has actually highlighted the importance of the relations between Iran and "independent and anti-arrogance countries" such as Venezuela.

Iran has actually found in Venezuela a partner inside the Organization of Petroleum Exporting Countries (OPEC) to defy the U.S. In a recent meeting of OPEC in Vienna, Venezuela supported Iran in standing against any increase of oil production. Saudi Arabia, the United Arab Emirates, Kuwait and Qatar were all in favor of an increase of 1.5 million barrels in daily production, but Iran and Venezuela, followed by Gaddafi's Libya, Ecuador (a country aligned with Venezuela), Algeria and Angola, voted against this measure. The failure to make a decision among OPEC countries on oil productions triggered crude prices hikes. Chavez argued that since the international oil market is sufficiently supplied, and oil prices are fair, there is no need for OPEC to increase oil production.

"Today's prices, about $100 per barrel, are fair, according to our point of view," Chavez said. "In the coming years, they will keep increasing, as well as gold, food and medicine prices."

Last year, Chavez stated that oil should be above $100 a barrel because the U.S. dollar "is increasingly worthless." The Latin America Herald Tribune reported that during the week ending June 3, the weekly oil basket of Venezuela rose to $103.01 from the previous week's $100.70. Venezuela, besides being a founding member of OPEC, is one of the globe's top oil exporters, producing 2.9 million barrels per day. Oil income represents more than a third of the Venezuelan economy.

After the collapse of the talks in Vienna, it was reported that Saudi Arabia would raise oil production anyway. The Saudi paper, Arab News, wrote that "oil prices fell on Friday [June 10] as Saudi Arabia began offering more oil to customers, easing worries about supply." Saudi-owned paper, Al-Hayat, reported that Riyadh would "boost supplies to 10 million bpd in July, and oil traders said the Kingdom was offering more to customers in Asia, which is driving the increase in global demand." There is actually a serious need to pump more oil, as the world is expected to use 1.38 million bpd of oil more than in 2010.

Venezuela, however, resists pressures to increase oil production, as Chavez wants to use the oil as a tool against the United States, among others. The Venezuelan president wants to be re-elected in 2012, but he needs money for his campaign and to try to pull the country out of debt and restore what has been a disastrous economy.

From the News

June 9, 2011

Ahmadinejad Calls for Expansions of Ties with Venezuela

Iran's President Mahmoud Ahmadinejad has attached special importance to anti-hegemony revolutions and warned of complicated plots by Western powers to bring free nations to their knees. "Support for revolutionary and independent countries in the world is among strategic and principled policies of the Islamic Republic of Iran," Ahmadinejad said.

He highlighted the significance of sustainable political and economic relations between Iran, independent and anti-arrogance countries, calling for the expansion of ties with Venezuela, Ecuador and Belarus.

Ahmadinejad Urges Agreements with Caracas

The Iranian chief executive also urged the country's officials to diligently pursue ways to implement agreements already signed with Caracas, Quito and Minsk. President Ahmadinejad's remarks came after Venezuela severed relations with the United States following Washington's sanctions against Venezuela's state-owned oil company for supplying gasoline to Iran on Sunday.

On May 24, the U.S. imposed sanctions against Venezuela's giant oil company Petroleos de Venezuela (PDVSA) for providing Iran with gasoline and other refined oil products. Under the sanctions, PDVSA is denied US government contracts and banned from Washington's export financing. Press TV (Iran)

June 8, 2011

OPEC Fails to Agree on Production

The Organization of Petroleum Exporting Countries (OPEC) left its oil output target unchanged, a decision that sent crude prices shooting higher on global markets and exposed deep divisions in the cartel amid calls for a hike in quotas. Traders had speculated that OPEC would boost production to help cool high oil prices and in turn revive flagging economic growth.

"Unfortunately, we are unable to reach a consensus this time to reduce or raise our production," OPEC Secretary General Abdullah Al Badri said after the meeting in Vienna, where the oil cartel maintains its headquarters. OPEC, which has a dozen member countries, kept its official output target at 24.84 million barrels per day (mbpd), where it has stood since January 2009.

Saudi Arabian Oil Minister Ali Al Naimi, speaking to reporters after the decision, said it was "one of the worst meetings we ever had." The failure to make a deal is a blow for consumer countries hoping OPEC would take action to stem fuel inflation. Following the latest OPEC decision, major stock markets fell on worries about a bleak global economic outlook, while oil prices jumped.

The United States had put pressure on Saudi Arabia to deliver a credible deal to cap crude prices and underpin faltering economic growth. Mr. Naimi said OPEC's four Gulf Arab countries proposed the 12-member group increase output by 1.5 million barrels a day to 30.3 million barrels a day, including Iraq which is not bound by an OPEC quota.

But they were left isolated by a majority of seven -- Libya, Algeria, Angola, Ecuador, Venezuela, Iraq and Iran -- who wanted to keep production unchanged. Nigeria's position was not known. Iran said the view of the majority was that supplies were adequate for the time being and that it had proposed delaying a decision on more oil by two or three months. "Iran believes there is no shortage of supply," acting Oil minister Mohammad Aliabadi told Reuters. "There is no request that we cannot meet, therefore there was no need to raise output and that was the opinion of many other OPEC members." Al-Arabiya (Dubai-based, Saudi-owned)

June 8, 2011

Chavez: 'Today's [Oil] Prices are Fair'

On Wednesday, Venezuelan President Hugo Chavez argued that since the international oil market is sufficiently supplied and oil prices are fair, there is no need for the Organization of Petroleum Exporting Countries (OPEC) to increase oil production.

"The international crude oil market is sufficiently supplied. There is no crisis. The causes of fair prices are not the lack of oil supply, but rather several structural factors," said Chavez during a press conference with his Ecuadorian counterpart, Rafael Correa.

President Chavez mentioned situations such as "the madness of bombing Libya, or the aggressions against Iran, another OPEC country." He commented that oil prices have been moving towards a fair level, which is currently happening.

"Today's prices, about $100 per barrel, are fair, according to our point of view. In the coming years they will keep increasing, as well as gold, food and medicine prices.

"OPEC has no reason to increase oil production in this moment. As far as the demand grows, it will have to be increase," Chavez said. Venezuela was a founding member of OPEC.

The Venezuelan president added, "There is oil for 150 years in Venezuela with the current rate of exploitation; it's scientifically certified." Venezuela's national oil reserves exceed 300 billion barrels, the world's largest.

On Wednesday, OPEC energy ministers will meet in Vienna for the organization's 159th ministerial meeting. The Minister of Energy and Oil, Rafael Ramirez, will attend the meeting in representation of Venezuela. Presidential Press Office, Venezuelan Embassy to the U.S.

June 8, 2011

Six Countries Opposed to Increasing Oil Production

Oil ministers from both Venezuela and Ecuador attended a meeting of the Organization of Petroleum Exporting Countries (OPEC) regarding daily oil production quotas in Vienna.

Whereas Saudi Arabia, the United Arab Emirates, Kuwait and Qatar were all in favor of an increase 1.5 million barrels in daily production, the governments of Algeria, Venezuela, Ecuador, Angola, Iran and Libya voted against the measure as they believe it will destabilize oil prices.

Venezuelan Energy and Oil Minister Rafael Ramirez stressed that although it was the first time that the OPEC nations had been unable to reach an agreement since its inception, it was not a "catastrophe."

"We are going to continue evaluating the market situation; we are going to be calm in order to maintain balance and our prices. All the ministers are going to be in touch," Ramirez said. Venezuela Analysis (Pro-Chavez website)

June 7, 2011

Chavez Vigorously Challenged U.S. Interests in Venezuela

Iran's Ambassador to Venezuela, Abdolreza Mesri, said Washington's antagonism toward common interests shared by Tehran and Caracas prompted U.S. sanctions against Venezuela's state-owned oil company. American officials, lacking a realistic approach towards norms and regulations in international diplomacy, have long resorted to the outdated use of unilateral sanctions. Iran, given its exercise of an independent foreign policy approach, has been the target of U.S. sanctions since the advent of the 1979 Islamic Revolution, said Abdolreza Mesri.

He added that the White House has sought to turn up the heat on Venezuelan President Hugo Chavez's government over the past few years, in a futile attempt to bring his administration under fierce criticism by opponents for its policies. That is because Chavez vigorously challenged U.S. interests in Venezuela through his opposition to U.S. unilateralism and support for the concept of a multi-polar world.

The remarks came days after Venezuela severed ties with the United States after Washington imposed sanctions on its giant oil company Petroleos de Venezuela (PDVSA) for providing Iran with gasoline and other refined oil products. Under the sanctions, PDVSA is denied US government contracts and banned from Washington's export financing. Press TV (Iran)

Obama to Chavez: 'U.S. Will Not Meddle with Venezuela's Affairs'

Chavez said that U.S. President Barack Obama once told him: "We have differences, but my government will never meddle with Venezuela's internal affairs."

The State Department imposed new sanctions against seven foreign companies, including PDVSA, under the Iran and Libya Sanctions Act of 1996, in response to the Iranian nuclear program. The Venezuelan oil conglomerate will not participate in any contract directly with Washington and will not have access to exports or imports financing programs and to U.S. oil technologies licenses.

The sanctions "are part of imperial madness," Chavez said, joking that "insanity is the highest stage of imperialism." "The U.S. Empire has imposed sanctions and threatens to impose new sanctions on Venezuela only because we sold two boats of gasoline to Iran. That was all we did," Chavez told reporters. El Universal (Venezuela)

June 6, 2011

U.S., Venezuela Relations Frozen, No Restoration in Sight

The relations with the United States are "frozen" and there is no indication that a breakthrough can be expected imminently, Nicolás Maduro, the Venezuelan Minister of Foreign Affairs, said on Sunday. Maduro stressed that his country wants to restore communications with Washington based on mutual respect.

"The relation is frozen ... It does not move and there is no indication that there could be positive elements of communication and respect in the near future," the Venezuelan foreign minister said in an interview with private TV network Televen, as reported by AFP.

The United States and Venezuela have been without ambassadors since the end of 2010. Venezuela's President Hugo Chávez, because of statements made by Larry Palmer during his nomination process, vetoed Palmer's nomination. Later, Washington revoked the diplomatic visa to Venezuela's envoy Bernardo Álvarez. El Universal (Venezuela)

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