Chavez Setback May Pinch Oil Prices

Had the vote gone in his favor, Chavez also would have given unfettered access to the country's foreign-exchange reserves to fund yet more social spending. But here's the rub: If he did that, it would likely spark even higher inflation, possibly igniting civil unrest among the working poor as food prices spiraled out of control.

The truth is that snowballing inflation may break out anyway with the same results, but perhaps at a later date.

Looking longer term, some see the vote as an encouraging signal to members of the opposition parties in Venezuela.

"The election result reduced Chavez's aura of invincibility," says Max Pyziur, an energy analyst at New York-based specialty commodity firm CPM Group. "The opposition has been a weak force. This at least gives them hope to organize."

It might be a long shot, but a meaningful opposition might one day reverse the expropriation of foreign-owned oil assets, such as those taken from Exxon Mobil(XOM Quote) and ConocoPhillips(COP Quote). With the eventual return of foreign companies, more efficient extraction of the oil may actually increase supply for the country and help ease the supply and demand balance on the world market.