CARACAS (Reuters) - Venezuelan President Hugo Chavez on Thursday threatened to stop selling oil to European countries if they apply a new ruling on illegal immigrants that is criticized in Latin America and by human rights groups.
European Union lawmakers ruled on Wednesday that illegal immigrants can be detained for up to 18 months and face a reentry ban of up to five years.
"We can't just stand by with our arms crossed," Chavez said at an event to celebrate his OPEC country's oil supplies to South America attended by Paraguay's visiting president-elect, who also criticized the law.
Millions of Latin Americans live in Europe, many from poor Andean countries and war-weary Colombia.
For centuries colonized by European nations, after independence Latin America also received waves of European immigrants escaping the major wars and economic crises of the 20th century.
"Venezuelan oil will not go to the countries that apply this shameful directive. I'll say it now, Venezuelan oil will not go," Chavez said.
The socialist ally of Cuba also threatened to expel investments made by such countries, warning he would draw up a list of their business in the OPEC member nation.
"We are ready to do this now," he said. "Here in Venezuela at least, they won't be missed."
Chavez has already nationalized several foreign companies in Venezuela, turning them into joint ventures controlled by the state. France's Total and Norway's Statoil are among the European companies operating in Venezuela.
He called on other leaders in the region to take action against the law.
Chavez has regularly issued conditional threats to halt crude shipments from Venezuela -- one of the world's largest exporters of oil -- although he has never followed through on a move that would hurt supplies at a time of record prices.
Such threats from Chavez, a price hawk, have sometimes caused world oil values to rise.
On Thursday, U.S. crude closed nearly $5 a barrel lower after China announced hikes in fuel prices that could dampen demand in the growing energy guzzler.
One Japanese trader downplayed Chavez's comments saying they did not seem to be affecting the Asian market on Friday morning.
"I don't think Chavez's words are so important, for the moment they have had no effect," said the trader, who asked not to be named.
Typically, Chavez, who clashes regularly with the Bush administration, threatens to stop shipping oil to the United States, even though it is by far Venezuela's biggest customer.
While he has had periodic tensions with individual European countries, Chavez generally has better relations with Europe than the United States.
His comments on Thursday followed a mending of ties with Spain, one of the main European investors in Venezuela, after a spat last year where the Spanish king told Chavez to "shut up."
Chavez has sought in recent years to diversify the country's oil customers, selling oil to Europe and, increasingly, to China.
The president also wants to lead a South American alliance to unite the continent.
Oil-endowed Venezuela sends few immigrants to Europe but the tough talk supports allies such as Bolivia and Ecuador, who have many thousands of citizens living in countries such as Spain.
Bolivian President Evo Morales on Wednesday said the European law was "racist."
"We, too, could say that we are going to expel those who have looted and stolen from us, those who imposed policies of hunger and misery, those who exported illness, exploitation, discrimination," Morales, an Aymara Indian, said.
(Writing by Saul Hudson, additional reporting by Fabian Andres Cambero; editing by Carol Bishopric)