Late last week, Venezuelan oil tanker captains joined the national strike opposing the rule of current President Hugo Chavez. On Friday, crude was trading at $US27.40 in New York, up 50c as fears gripped the market that disruptions would cut into US winter fuel supplies.

In response to the move by striking oil tanker captains, Mr Chavez threatened to undertake military action to retake the vessels.

Apart from military intervention, in order to quell increasing civil unrest in his country, Mr Chavez said he would also restructure the board of state oil giant PDVSA and replace dissident managers. "If we have to change the whole of directors, we will," Mr Chavez told supporters in Caracas on the weekend.

Also making oil traders nervous was renewed Iraqi defiance to UN inspectors searching for weapons of mass destruction. Over the weekend, Iraq set the stage for a coming conflict with US-backed coalition forces after saying it possessed no weapons of mass destruction in a 12,000 page declaration.