CARACAS, Venezuela — President Hugo Chavez on Sunday threatened to cut off oil sales to the United States if Exxon Mobil Corp. wins court judgments to seize billions of dollars in Venezuelan assets.
"If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said. "Do you know how? We aren't going to send oil to the United States. Take note, Mr. Bush, Mr. Danger."
Although Venezuela still is a significant oil supplier to the U.S. its relative importance has been decreasing during the last 5 years, going from second to fourth place among U.S. import sources. This is due to the loss of production capacity of the Venezuelan oil industry, a decline brought about by the politicization of the state-owned petroleum company under Chavez. Not only has production capacity declined but also half of the Venezuelan oil exports to the U.S. can only be refined in the United States due to its physical properties. This means that Chavez cannot easily sell this oil to alternative clients such as China or India. For this to be possible these countries would have to build refineries capable of processing Venezuelan oil, something that would take at least three to four years to accomplish, even if they started today.
emphasis mine