Chavez Setback May Pinch Oil Prices

"In a geopolitical sense he's been weakened, so it basically delegitimizes the regime," says Brusuelas. "He may now find his colleagues urging him to de-escalate the rhetoric."

OPEC's Arab country members like Saudi Arabia are becoming increasingly concerned that oil prices near $100 a barrel are not sustainable. Continued high energy costs would likely dramatically slow the U.S. economy and so eventually crimp demand, perhaps starting a downward spiral.

Chavez's flamboyant threats aimed at the U.S., although seen by many as hollow, have been at least part of the story in pushing oil up from around $55 a barrel at the beginning of the year.

So in the shorter term, there will likely be a toned-down Chavez, perhaps greasing the skids for a pullback in oil prices, says Brusuelas.

But Brusuelas is careful to note that Chavez is still very much in charge of the country, firmly in office and has the backing of the army. That means he will likely continue to be something of an irritant, albeit a potentially less vocal one.

Another problem for Venezuela has been consumer inflation, which is currently running at around 17% a year, largely driven by massive spending on public health care and education programs. That's part of the reason Chavez has been able to garner such solid support among the poor.