On Friday, The Wall Street Journal published a report that suggested closer ties between Venezuelan President Hugo Chavez and rebels attempting to overthrow Colombia's government. Chavez has been linked to Colombian rebels previously, but the paper reported it had reviewed computer files indicating concrete offers by Venezuela's leader to arm guerillas. That appears to heighten the chances that the United States could impose sanctions on one of its biggest oil suppliers.
"If we put on sanctions, I'm sure Chavez would threaten to cut off our oil supply," said Phil Flynn, an analyst at Alaron Trading Corp. "Obviously that would have a major impact on oil prices."
Light, sweet crude for June delivery vaulted to a new record of $126.25 on the New York Mercantile Exchange before retreating slightly to settle up $2.27 at a record $125.96. Oil futures set records for the fifth straight day, and ended the week up $9.64, or 8.3 percent.
Even if Chavez cut oil shipments to the United States, Venezuelan oil would still make its way to the United States via middle men, but that new layer in the supply chain would bump up costs.
Oil nears $126 before settling at $125.96, setting a record again
