Venezuela sells petrol to Iran to reinforce front against US

Venezuela is to sell petrol to Iran to alleviate its ally's crippling fuel shortage and to bolster their common front against the US, it was announced yesterday.

President Hugo Chávez made the promise during a visit to Tehran where he pledged an "axis of unity" with President Mahmoud Ahmadinejad, according to Venezuela's oil minister, Rafael Ramirez, who was part of the visiting delegation.

"Yes, Iranians have asked to buy gasoline from us and we have accepted this demand," he told the Iranian daily newspaper Shargh, without elaborating.

The announcement came a week after Iran imposed fuel rationing which brought riots in several cities and increased anger at the government's failure to ease economic hardship. Iran is a major oil producer but a shortage of refineries forces it to import more than half of its domestic needs. Rationing was an attempt to reduce consumption and the government subsidies which keep petrol prices artificially low.

Yesterday's announcement signalled an extension of Mr Chávez's use of Venezuela's considerable oil reserves to forge alliances against the US. "The two countries will, united, defeat the imperialism of North America," he told reporters. With a smile he added: "When I come to Iran, Washington gets upset."

It was not immediately clear how much petrol would be shipped from the Caribbean to the Persian Gulf, nor whether Tehran would receive a discount on the grounds it was a revolutionary "brother" in standing up to the west. The two presidents signed a number of other economic agreements, including for a dairy factory in Venezuela, a methanol factory in Iran and efforts to boost each other's exports to Latin America and the Indian subcontinent.

For Tehran it is a way to reduce its international isolation - the result of US-led pressure against its nuclear programme - and for Caracas it is a way to project Mr Chávez as a global player.

He has increased oil exports to China, sent discounted oil to places as diverse as Alaska and London and taken over majority shares in drilling projects, prompting walkouts by Exxon and other multinationals. However, Venezuela remains more dependent than ever on exports to the US and some analysts say Mr Chávez is nearing the bottom of his treasure chest.