Venezuela halts oil supplies to Exxon Mobil

By Frank Jack Daniel

CARACAS (Reuters) - Venezuelan President Hugo Chavez stopped oil exports to Exxon Mobil Corp (XOM.N: Quote, Profile, Research) on Tuesday, escalating a multibillion-dollar fight with the U.S. company two days after threatening to cut off all supplies to America.

The anti-U.S. president's retaliation for Exxon's legal offensive, which froze $12 billion in Venezuelan assets, pushed oil prices higher in late trading.

State oil company PDVSA said it broke off commercial ties and halted the supply of crude and petroleum products to America's largest company in a fight over Exxon's demand for compensation after Chavez seized a crude project last year.

"Faced with the legal-economic harassment started by Exxon Mobil against PDVSA and as an act of reciprocity, PDVSA has decided to suspend commercial relations," the Venezuelan company said in a statement.

Venezuela is the No. 4 energy supplier to the United States, which is its biggest customer.

Washington has played down Chavez's threat, industry analysts say it is unlikely he will carry it out and even his deputy energy minister said Venezuela wanted to avoid a general cutoff because it would be costly for the OPEC nation.

But after regularly issuing conditional warnings over ending exports to what he calls the evil superpower, Tuesday's albeit limited move was the first time Chavez has taken any concrete action over supplies in a dispute.

PDVSA said it would not break certain contracts with Exxon, an apparent reference, analysts said, to the jointly owned Chalmette refinery in Louisiana.