Chavez threatens U.S. oil cut in Colombia dispute

Venezuelan President Hugo Chavez greets supporters as he stands behind a flame from the torch at the entrance of Simon Bolivar's tomb in Caracas July 24, 2010, Chavez is attending a ceremony to mark the birthday of independence hero Bolivar at Caracas' national cemetery.

CARACAS (Reuters) - Venezuelan President Hugo Chavez threatened on Sunday to cut oil supplies to the United States in case of a military attack from Colombia as a dispute escalated over charges his country harbors Colombian rebels.

A vocal and frequent critic of the United States, Chavez broke off diplomatic relations with Colombia last week over the claims by the outgoing government of President Alvaro Uribe, a close U.S. ally.

Chavez, a leftist who says Washington is behind the charges, has never carried out previous threats to cut oil supplies to the United States, Venezuela's main customer.

"If there was any armed aggression against Venezuela from Colombian territory or from anywhere else, promoted by the Yankee empire, we would suspend oil shipments to the United States, even if we have to eat stones here," he said.

"We would not send a drop more to U.S. refineries," he said to a roar of approval from thousands of supporters at a rally for his Socialist party.

Chavez, a former soldier and close ally of Cuba's Fidel Castro, is also angry with Bogota over a deal to allow U.S. troops access to a series of military bases.

Venezuela, a member of OPEC, gets more than 90 percent of its export income from oil sales, mostly to the United States, and the South American country's economy would collapse quickly if it stopped shipments.

Speaking from Cuba, Venezuelan Oil Minister Rafael Ramirez said the oil industry was on "yellow alert" and prepared to follow Chavez's orders.

"That's the first step," Ramirez said. "We are ready to suspend the shipment of oil and products to the United States if we suffer some type of military aggression."

Oil workers assembled in the port of Puerto La Cruz were told to prepare themselves and their families for a possible "bellicose imperial" action, state oil company PDVSA said.

USEFUL BUT COSTLY

For Chavez, who has suffered a slide in his popularity this year because of a deep recession, the dispute with Colombia is a useful way of rallying supporters ahead of parliamentary elections in September. The president, who was briefly ousted in a coup in 2002, often alleges U.S.-backed plots against him.

The rift has been costly for both nations. Billions of dollars in trade were lost when Chavez ordered government importers not to buy from the neighboring country.

Uribe will be succeeded as Colombia's president on August 7 by Juan Manuel Santos, who has been careful to avoid public comment on the dispute.

Although Chavez says he hopes ties can return to normal under Santos, tensions are likely to resurface over the issue of FARC camps and a U.S. military presence in Colombia.

A group of South American foreign ministers will meet in Ecuador next week in an attempt to resolve the crisis.

Santos was Colombia's defense minister in 2008 and ordered the bombing of a guerrilla camp in Ecuador, prompting Chavez to order troops to the border with Colombia to deter any plans to carry out a similar raid in Venezuela.

On Thursday, Colombia's envoy to the Organization of American States (OAS) revealed coordinates, photos and videos of FARC camps allegedly in Venezuela -- apparently choosing diplomacy to avoid sparking a war in the region.

But Chavez said he feared an attack from Colombia was imminent and canceled a trip to Havana for a celebration of Cuba's Communist revolution, saying the threat against Venezuela meant it was not wise for him to travel.

The documents shown by Bogota's envoy Luis Alfonso Hoyos to the OAS permanent council included photos of guerrilla leaders relaxing in jungle and mountain sites that he described as summer camps. Chavez says the camps are not in Venezuela.

"We reject, have rejected and will always reject the possibility that a foreign guerrilla force or paramilitary force or foreign military installs itself in the tiniest square millimeter of our sovereign territory," Chavez said.

Venezuela shares a 1,375-mile (2,200-km) border with Colombia, much of it in rugged terrain that is hard to police. Many remote villages complain of the presence of paramilitary fighters and guerrillas.

(Editing by John O'Callaghan and Stacey Joyce)