Oil May Reach $500 a Barrel, Chavez Warns

CARACAS, Venezuela — President Chavez of Venezuela said crude oil would rise to "$400 or $500" a barrel in the event of an attack on his country, the biggest petroleum exporter in the Americas.

The reactivation of the American Fourth Fleet in the Caribbean on July 1 and what he said is a possible American base on the Guajira Peninsula, shared by Venezuela and Colombia, are both threats, Mr. Chavez said in a speech broadcast last night from the military academy. The defense minister of Colombia, Juan Manuel Santos, said his country doesn't plan to give America a base on the Guajira, EFE newswire reported Wednesday.

Mr. Chavez, who has long criticized the American role in Latin America and warned that oil could rise to $200 a barrel in the case of an attack on Venezuela or Iran, said that given recent price increases in the crude market, his previous 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 rose $1.34, or 1.1%, to $125.56 a barrel at 11:10 a.m. on the New York Mercantile Exchange. Yesterday, oil fell $1.58, or 1.3%, to settle at $124.22 a barrel. That was the first time in eight days that oil didn't reach a record. Prices are 96% higher than a year ago.

Venezuela will launch its first missile from a Sukhoil jet fighter in the next week in a maritime exercise, Mr. 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.

In July Mr. Chavez will meet with President Medvedev of Russia in Moscow to discuss more arms purchases, which may include long and short-range anti-aircraft defense systems. "We'll continue outfitting the armed forces, now more quickly than before," the Venezuelan president said, according to a statement from the Information Ministry.