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Venezuelan President Hugo Chavez speaks during a press conference at the Miraflores presidential palace in Caracas on Nov. 13, 2007. - 


KAI RYSSDAL: Venezuela is threatening to dump its biggest oil customer. That would be us. It's a story that came to a head late last week with a win in a British court by ExxonMobil. Last year Venezuelan president Hugo Chavez nationalized a multi-billion dollar oil project. The U.S. oil giant objected, and convinced a judge to freeze $12 billion in Venezuelan assets as compensation. Over the weekend Chavez threatened retaliation by cutting off crude exports to the U.S.

From the Americas Desk at WLRN, Marketplace's Dan Grech explains.

DAN GRECH: During his eight years in power, Venezuelan President Hugo Chavez has proven himself to be a man of his word. He vowed to nationalize industries like electricity, telecom and oil -- then did just that, but most oil analysts don't think Chavez will make good on his latest threat to stop shipping oil to the U.S.

PATRICK ESTERUELAS: These threats are still very much an empty threat.

That's oil analyst Patrick Esteruelas with the Eurasia Group. He says Venezuela can't afford to choke its golden goose, about two thirds of its oil exports go to the U.S.

ESTERUELAS: The Venezuelan government, if anything, is today more dependent on the U.S. market as its primary source of revenue than it ever has been before.

This dependency has emboldened ExxonMobil to go after Venezuela's overseas assets. The firm is determined to reclaim fair compensation for the oil fields Chavez took, but the hardball tactic has led left some analysts scratching their heads. Mark Weisbrot's with the Center for Economic and Policy Research. He says Exxon and Venezuela are already in an arbitration sponsored by the World Bank, and Venezuela has a history of compensating the firms it nationalizes.

MARK WEISBROT: It's almost like a preemptive war. They've decided to harass the government of Venezuela and I'm not sure for what reason, because it doesn't seem like it will do them much good.

Venezuela has begun moving oil revenue into Swiss banks to avoid having those assets frozen. The rivals meet again in a U.S. court on Wednesday.

I'm Dan Grech for Marketplace.