RIYADH, Feb 23: Oil markets are turbulent. With prices crossing the $100-mark this week, there does not seem to be an immediate respite. After dropping to mid-$80 levels a couple of weeks back, crude prices seem to be surging on Venezuelan bash with Exxon, ongoing events in Nigeria and growing concerns about Opec output policy.

With Saudi Arabia and Norway agreeing this week that the markets are well supplied, markets are definitely nervous.

Despite gloomy predictions and uncertainties about the global economic health, oil markets are firm. A new, so called “Chavez Surcharge” equivalent to $3.5 per barrel, also seem to be impacting the markets.

“Prices are going to be significantly higher,” says John V. Mitchell, an associate fellow at Chatham House in London. That realisation deepened this week when Opec president, Algeria’s Oil Minister Chakib Khelil, rebuffed President Bush’s appeal for Opec to boost production, and so help avert a US recession by easing oil prices on the world market.

Adding to the jitters over the world’s oil supplies was the colder than expected weather in the US and an explosion last Monday at a refinery in Big Spring, Texas, which halted its 67,000-barrel-a-day output.

But even before, a bitter wrangle between Venezuela’s oil officials and ExxonMobil over a rich oil field, as well as rebel action in the Niger Delta, had raised fears that oil supplies could be seriously interrupted.

Interestingly, global demand may be going down. The IEA also admits and so does the Opec. In its February Monthly Oil Report, the Opec says demand would likely grow by only1.43 per cent this year rather than its previously estimated 1.52 per cent.

And in the meantime, the Opec production is also signalling growth. The Opec production minus Iraq was 29.79 million in January, up 136,000 barrels a day from December. Including Iraq, Opec output last month was around 31.99 million. Saudi Arabia alone pumped 9.08 million barrels a day in January, up 100,000 barrels a day from December the Opec data said.

The ongoing battle between the American oil giant Exxon Mobil and Venezuelan state-run oil company Petroleos de Venezuela SA (PDVSA) is now being blamed for the current bump in oil prices.

Venezuela, under leftist Hugo Chavez, has been nationalising the oil and gas sector for some time now, reducing the stake of the oil majors in its energy assets. A number of oil majors, including the French Total have given in and accepted the new terms.

However, the American oil major, Exxon Mobil declined to accept the new terms and consequently in 2007 the company was forced to leave the country, thereby depriving it of a lucrative asset. Exxon Mobile sued PDSVA in several European and American courts, which have now ordered the freezing of $12 billion of PDSVA’s global assets as a guarantee on the eve of the trial. PDSVA, the state giant, has about $90 billion worth of property all over the world.

Venezuelan President Hugo Chavez threatened to discontinue all oil supplies to the United States. Of the 10 million barrels the US imports each day. Venezuela is the fourth largest crude exporter behind Canada, Saudi Arabia, and Mexico.

However, realising the stakes were too high in this game of brinkmanship, Caracas later relented and did not fully implement its threat. It clarified it was barring ExxonMobil, the and not the US, from receiving Venezuelan oil.

Thus the tug of war between the Administration in Washington and its next door nemesis, Hugo Chavez, continues unabated. A new surcharge thus has been added to the already turbulent markets, analysts now emphasise.

Once again it seems forces outside the typical demand - supply factors are impacting the global crude markets. Politics and oil thus continue to go hand in hand and oil prices thus continue their upward march.

Politics continues to take its toll and a heavy one.