Cuba, oil prices after Chavez's death

Published On: Mar 06 2013 07:00:02 AM EST
Updated On: Mar 06 2013 07:50:20 AM EST

Venezuelan President Hugo Chavez dies.

MIAMI -

Hugo Chavez and Fidel Castro had close ties. In fact, when it came to Chavez there was probably no bigger supporter than Castro.

Even before his cancer treatments in Cuba began, Chavez had a political relationship with Cuba. He considered Castro a friend and mentor.
Chavez was one of the first and most frequent visitors to Castro's sickbed, bringing gifts and good humor.

When the tables turned and Chavez fell ill, he sought treatment in Cuba where he could count on the company of his mentor and close ally.

"Cuba has been a great source of support for Hugo Chavez," said Philip Peters of the Lexington Institute. "I think it's very clear that Hugo Chavez has looked at Fidel Castro as a father figure, and he has looked at Cuba as a model."

Chavez has been just as important for Cuba, helping pull the country out of economic crisis in the post-Soviet era, a time of widespread food and energy shortages.

Cuba now receives about $3.5 billion a year in subsidies from its regional ally, most of it in the form of cheap oil.

Analysts say the island could be hit with blackouts and belt-tightening with Chavez no longer on the scene, but it won't be as bad as in the 1990s.

"Cuba gets a lot of oil from Venezuela at cut rate prices," Peters said. "Cuba gets investment from Venezuela in a lot of industries, including the petroleum industry so it's a big economic partner. If that were to somehow fall apart, it would be a big blow."
Venezuela sits on the world's second largest oil reserves, behind Saudi Arabia.

The full impact of Chavez's death on the oil market may not be known until a new leader is elected.

After news about his death, the oil markets in New York rose 22 cents to just below $91 a barrel.

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