Caracas, Venezuela, Feb. 10 2008 - Venezuelan President Hugo Chavez called Exxon Mobil Corp.'s attempt to freeze $12 billion in Venezuelan assets a case of U.S. ``economic sabotage'' and said such behavior could drive him to cut off oil supplies.

A cutoff would drive oil to $200 a barrel, Chavez said today on his ``Alo, Presidente'' weekly talk show on state radio and television.

``If you freeze us, if you don't stop trying to freeze, doing us damage, we can do you damage,'' Chavez said. ``We won't send oil to the U.S. Get this, Mr. Bush, Mr. Danger. If the economic war continues against Venezuela, the price of oil will reach $200. Venezuela will take up the economic war.''

Crude oil for March delivery rose $3.66, or 4.2 percent, to settle at $91.77 a barrel Feb. 8 on the New York Mercantile Exchange. Oil has dropped 8.3 percent since reaching a record $100.09 a barrel on Jan. 3.

Supporters of the Venezuelan government have previously blamed the U.S. for the Exxon Mobil lawsuit. Chavez's statement was the first time he has held Bush responsible for the suit.

Previous Warning

State Department spokesman Tom Casey, asked whether the U.S. had coordinated with Exxon on the lawsuit, said as far as he knew Exxon had pursued the case on its own.

He told reporters in Washington on Feb. 8 that the U.S. position was that any nationalization or expropriation of property should be done according to international standards and regulations, ``and that very specifically includes fair-market- value compensation.''

Chavez previously warned that the price of oil may reach $200 if the U.S. interfered in Venezuelan elections on Dec. 2.

Exxon is suing Petroleos de Venezuela SA, the state oil company, in international arbitration for the seizure of control and a majority stake in a multibillion-dollar oil production project in Venezuela last year.

The U.S. oil company said it won court orders in the U.K., Netherlands and Netherlands Antilles blocking the state oil company from selling assets and transferring wealth out of those countries if moving the money would reduce available assets below $12 billion.

Costly to Venezuela

Exxon also won a U.S. court order seizing as much as $315 million that would otherwise have been transferred to Petroleos de Venezuela as part of a bond buyback transaction last month, according to federal court filings in New York.

Venezuela provides about 7.7 percent of U.S. consumption, either directly or through its Hovensa LLC joint venture in the U.S. Virgin Islands. While that removal would affect the U.S. oil market, it would be costly to Venezuela, which sends more than half of its production to the country Chavez calls ``the empire.''

Venezuela counts on oil income for 90 percent of its foreign exchange and half its federal tax revenue. Petroleos de Venezuela also provides social services outside the budget, such as the company's sale yesterday of 252 tons of powdered milk in neighborhoods near the Puerto La Cruz refinery.

The country can't easily send oil to new countries because most of the world's refineries that are able to handle Venezuelan crude are in the U.S.

To contact the reporter on this story: Steven Bodzin in Caracas at sbodzin@bloomberg.net .

Source: Bloomberg.com