Hugo Chavez –the orchestratorof Venezuela’s oil industry- which sits on an estimated 297 billionbarrels of oil – died at 4:25pm on Tuesday at a military hospital inCaracas.Crude oil prices rose moderately in reaction to the news, andwill likely continue their upward trajectory. Brent crude gained 33cents to $111.94 a barrel on the ICE Futures exchange in London. InNew York crude oil closed at $91.04 a barrel, rising 0.24%. Brentclosed at $112.95 on Tuesday. Chavez’s death wasn’t the solecatalyst for the price bump. The closure of a North Sea Brentpipeline –which transports 90,000 barrels a day – is also a factorthat sent prices upwards.Investors are betting on higher oil prices, andexperts are closely watching the political situation, asVenezuela is an export driven economy and a top 5 USsupplier. The future of crude oil prices will be dependent on Venezuela’sfuture geopolitical situation, and there may be a brief drop in oilproduction output.“Problems in Venezuela will undoubtedly impact the market,but may not be too much of a problem for the market to copewith,” said Ric Spooner, chief market analyst at CMC Markets inSydney.A potential oil super power, Venezuela hasn’t tapped into itsfull oil potential. Venezuela is currently the world’s fourthlargest OPEC producer, after Saudi Arabia, Iraq, and Kuwait.Venezuela’s oil deposits of an estimated 297 billion barrels arecomparable or even slightly above those of Saudi Arabia, theworld’s biggest oil producer. But actual production is far behinddue to decades of underinvestment. In 2012 Saudi Arabiaexported 12% of the world’s oil, and Venezuela only 3%. Since 1998oil output has fallen 25%, currently Venezuela is the fifth largestoil exporter. When Chavez took office in 1999, Venezuelan crude oilwas about $9 a barrel, and fourteen years later, it is $103.89,almost an 11-fold increase.A new era for Venezuela’s oil richesThe death of Hugo Chavez has unraveled a Pandora’s box for thefuture of Venezuelan oil, which has been state controlled sinceChavez took power in 1999. The man who once declared thatcapitalism killed Mars also used petro-dollars to nationalizeVenezuela’s oil wealth, and then used profits to subsidize asocialist welfare state.”Chavez has been in the forefront of achieving sovereigntyover the oil resources of the country. Oil is fundamental toVenezuela, for its geostrategic global economy, because our nationhas enormous resources,” said Rafael Ramirez, Venezuela’senergy minister.Energy sales account for 95% of the country’s export earnings.So far oil has been safe guarded and wealth redistributed by Chavezhimself, but his exit from the political scene could open a neweconomic market.Many neighboring oil executives are meeting the politicaltransition with optimism, and investors are eyeing more friendlymarket policies. “Things will change,” said Ronald Pantin, chiefexecutive of Bogota-based oil producer Pacific Rubiales Energy Corpin an interview before Chavez’s death.“It took years for theopposition to realize that a lot of what Chavez did, Venezuelansliked,” saidRamirez. “The emphasis ofthe state’s role in the economy is something that will be long-lasting.””It’s too early to tell how the new leader will handle it,but ConocoPhillips could benefit the most,” Fadel Gheit,senior oil analyst at Oppenheimer & Co, told Christian ScienceMonitor.US oil companies helped Venezuela develop wells in the firsthalf of the 20th century. In the 1970s, the country’s oil and gassector was nationalized, essentially ousting foreign companies.Since Chavez became president, state control over this sector – andthe rest of the economy – has intensified. Chavez kicked out oilgiants Exxon-Mobil and Conoco-Phillips and nationalized over 1000companies.ConocoPhillips is looking for over $20 billion incompensation of lost assets. In fact, at the time Chavez ousted thecompany, it was the biggest foreign stakeholder in Venezuela, so itwill likely try and regain its former assets.Exxon Mobil was seeking $12 billion in compensation forassets that were taken from its Cerro Negro, but in January 2013an arbitration panel has awarded the US oil giant less than10% – $908 million.Chevron Corporation continues to have some projects in thecountry, but the company faces constant pressure fromstate owned agencies.Venezuela a ‘priority’ for Russian oil investmentSimilar to the US, Russia has also had a large presence inthe Venezuelan energy sector. For almost a decade, Russia’s largestprivately owned oil company Lukoil has been developing theVenezuelan Orinoco Oil Belt with the country’s state-oil firmPetroleum of Venezuela, the world’s third largest.Another Russian energy major, Gazprom has been developinggas deposits in the Gulf of Venezuela since 2008.Last month Russia’s leader in petroleum industry, Rosneftannounced Venezuela will be a ‘priority’ for the company in foreignenergy projects. The oil giant agreed to develop several fields inthe crude-rich southeast region, and has committed $40 billion ininvestment. However, Petroleum of Venezuela will control themajority of the project’s stake, at 60%.If an opposition party is elected, the oil game in Venezuelacould change.Russia hopes all the agreements reached with Venezuela under theHugo Chavez presidency will remain in place and the two countrieswill retain the same level of cooperation, Russian Deputy PrimeMinister Arkady Dvorkovich said on Wednesday.“We hope that all the agreements that were reached will beimplemented. We also intend to fulfill our commitments and hopethat the policy of Venezuela will stay the same,” Mr Dvorkovichsaid.But experts say that it is likely that the country’s policieswill not change much, as Nicholas Maduro, endorsed by Chavez, isfavored by political pundits to take over as president. Theelection will be held in 30 days.“My expectation is that we will see the status quo, with atransition to a similar style of government from Chavez’ssuccessor,” said Katherine Spector, head of commodity strategyat CIBC World Markets in New York.