Oil price hovers near $46
Chavez victory cheers market
 |  Iraqi pipelines remain vulnerable to sabotage. |
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| | FACT BOX | NET OIL EXPORTERS
(millions of barrels per day, 2003)
1. Saudi Arabia 8.38
2. Russia 5.81
3. Norway 3.02
4. Iran 2.48
5. UAE 2.29
6. Venezuela 2.23
Source: U.S. Department of Energy June 2004
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LONDON, England -- Oil prices are down from record highs after Venezuela's President Hugo Chavez won a referendum on his rule, but other supply worries are keeping prices near $46 a barrel.
New York light crude futures, which are up more than 40 percent this year, settled Monday at $46.05, down from a record high of $46.91 earlier in the day.
That was the highest level since the New York Mercantile Exchange launched oil futures 21 years ago.
In London, Brent crude jumped to a fresh record of $44.11 a barrel Monday.
Analysts said Monday's spike in prices was due to reports that Shi'ite militia in Iraq had set fire to an oil well, raising fears about supplies of crude.
The battle between Russian oil giant Yukos and the tax authorities also is having an impact on the global supply outlook.
In the longer term, however, Chavez's victory is expected to ease fears that political unrest could dent supplies from Venezuela -- the world's sixth-largest oil exporter.
It exported an average 2.23 million barrels a day last year, and normally provides about 14 percent of U.S. imports.
But Venezuela's oil industry is still suffering the fall-out from a strike 18 months ago that cut production capacity.
The work stoppages were called by political opponents of Chavez who disapproved of his oil policies and urged his resignation.
Results from Sunday's vote gave Chavez a 58 percent backing to stay in Venezuela's top job for the remaining two years of his term. (Full story)
The head of Venezuela's state-run oil company said the industry can now expect a period of stability and growth.
"For the oil industry, this event (the referendum) will contribute to stabilization," Ali Rodriguez, the president of Petroleos de Venezuela S.A., or PDVSA, said.
"At last, our oil workers can work without the constant pressure of these (political) campaigns."
Along with concerns over Venezuelan oil supplies, crude prices have been driven to new highs by fears of sabotage of Iraqi oil facilities and worries that Russian output could plunge if major producer Yukos is forced into bankruptcy due to its huge tax debt.
At the same time, global oil demand has been growing even faster than previously thought over the last three years, according to the International Energy Agency. Much of that demand is coming from China, India and other fast-growing economies.
Revisions to world demand estimates since 2002 have pushed the forecast for this year up by 750,000 barrels a day to 82.2 million bpd, the IEA said in its monthly Oil Market Report.
Prices eased briefly last week after Saudi Arabia's oil minister, Ali al-Nuaimi, said Wednesday his country could raise production immediately by 1.3 million bpd. (Full story)
But prices began rising again as investors questioned whether the kingdom could deliver on that promise.
Prices were also supported by a Shiite uprising in Iraq, which Iraqi officials have blamed for halving the country's vital oil exports.
On Thursday, militiamen loyal to rebel Shi'ite cleric Muqtada al-Sadr threatened to blow up oil pipelines as the U.S. military launched a major offensive to crush the resistance. (Full story)
Oil prices have risen sharply since the early 2002 level of about $20 a barrel. But after adjusting for inflation, they are still well below the levels reached in the "oil shock" of the early 1980s.
According to the U.S. Department of Energy, the average price of oil in 1981 was $31.77 a barrel, or about $60 in 2004 dollars. The February 1981 peak price of $39.00 equals about $73.50 today.
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Associated Press contributed to this report.
