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Unlike Saddam in Iraq Hugo Chavez solidly popular in oil rich Venezuela – can China-Venezuela strategic alliance threaten crude oil price?
Hugo Chavez, the President of Venezuela, a strong critic of the Western nation especially the United States enjoys according independent polling firms solid support from Venezuelans. The oil production from Venezuela is critical for the Western hemisphere to maintain stable supply of oil.
Nearly 72 percent of Venezuelan voters support President Hugo Chavez, a new poll released July 26 by Caracas-based polling firm Datanalisis shows. A separate poll released by Keller & Asociados, another polling firm in Caracas, shows that 49 percent of voters would re-elect Chavez if elections were held July 27, while 41 percent would vote for a different candidate. Both polling companies are considered credible independent firms that are not aligned with the Chavez government.
China in recent days has established strategic alliance with Venezuela. China gains energy, Venezuela gains support of a UN Security Council member. Oil hungry China and oil rich Venezuela both can work together to create a crude shortage for the rest of the world. Unlike Saddam it will be difficult to dislodge Chavez given his popularity in Venezuela. In addition, Latin American countries like Brazil and others oppose any international interference in Venezuela.
That can spell long-term problems for the oil market as Chinese demands skyrocket in coming years.
Venezuela at the same time may not be able to supply crude oil to the world as it keeps promising. Venezuela likely will be unable to reach the crude oil production target of 5 million barrels per day the government of President Hugo Chavez has set for 2010, U.S. investment bank JP Morgan Chase says in a report released on July 26. The report notes that the windfall oil revenues Venezuela has received in recent years because of high oil prices has been invested mostly in social programs, and investment in the oil sector has declined. The report also states that foreign oil companies will not lose interest in Venezuela despite sharply higher taxes and royalties.
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