UPDATE 2-Venezuela oil price tumbles, Chavez pressured

Fri Oct 24, 2008 6:38pm BST

(Adds analysts comment, details on tax revenues)

CARACAS Oct 24 (Reuters) - The price of Venezuelan oil fell more than 10 percent this week, boosting financial pressure on the government of leftist President Hugo Chavez whose popularity depends on oil-financed social programs.

Analysts said Chavez could survive a large oil price drop in the short term due to abundant government funds, but the socialist stalwart could face a larger-than-expected 2009 fiscal deficit amid the global financial crisis.

The average price for Venezuela's oil basket dropped $6.91, to $61.09 per barrel, for the week ending Oct. 24, the OPEC nation's energy ministry said on Friday, amid a massive tumble of energy prices across the globe.

Ratings agency S&P on Friday said it maintained a stable outlook for Venezuela and expected the current account to remain in surplus until at least 2011, though warned it could have to devalue its currency in 2009.

The price drop could eliminate some $9 billion in revenues that the government expected to receive through a windfall oil tax created earlier this year.

The tax went into effect when world oil prices were at $70 per barrel -- $5 above the price U.S light crude was fetching in Friday afternoon trading.

The oil price was closing in on the 2009 government budget price target of $60 per barrel, meaning a further slump could boost the budget shortfall an expected $5.6 billion.

Venezuelan lawmakers usually create an artificially low target for the oil price, allowing the government to spend the money with fewer strings attached later.

If oil prices stay at the current level, Chavez will have to reduce discretionary spending significantly next year.

"This means that without that extra income from the oil industry, the administration ... will have to choose between social programs rather than financing all of them," said David Duarte of the online financial analysis group 4CAST. (Reporting by Fabian Andres Cambero; Writing by Brian Ellsworth; Editing by Christian Wiessner)