Oil prices fell heavily yesterday following the resignation of Venezuela's President, Mr Hugo Chavez, under pressure from the military. The move reignited oil market fears that the OPEC producer might revert to a policy of cheating on cartel output limits.

Staff at the Venezuelan state oil company ended a strike that hit exports this week and said they would resume normal supplies from the world's fourth largest exporter.

Brent blend crude for June ended down $1.44 in London at $23.19 (€26.39) a barrel. In New York, US light crude slumped $1.68 to $23.31 a barrel, a five-week low.

Venezuela is the world's fourth largest oil exporter and a leading supplier to the US.

Former Venezuelan Oil Minister Mr Humberto Calderon Berti, said the next government might well abandon Mr Chavez's strict application of OPEC quotas and recapture market share lost over his three-year tenure.

"I think policy will be changed. It will be orientated more towards capturing markets while maintaining ties in OPEC. It's going to be a policy of production expansion within OPEC in an orderly way," he said.

A heavy slide in Venezuelan oil production capacity during the Chavez years might mean a new government will be unable to threaten any early repeat of pre-Chavez policy.

"They're not going to be a threat for some time because they have no spare capacity," said oil analyst Paul Horsnell of J.P. Morgan. "And in any case it's going to be expedient for any incoming government to cooperate with Saudi Arabia.

Crude prices now are sharply off Monday's $27 a barrel when Iraqi President Saddam Hussein announced a month-long ban on exports in protest at Israel's military incursions into Palestinian territories.

Baghdad said it would review policy after 30 days if Israel had not withdrawn its troops.