Elections in Russia and Venezuela over the weekend provide a mixed bag of indicators for the global energy markets.

Vladimir Putin, in what was termed a referendum on his leadership, lead his party, United Russia, to victory in the Russian parliamentary elections. Based on the returns, his party now controls 315 of the 450 seats, and allied parties control another 78. Given his role as leader of the United Russia party, Putin is expected to maintain political control of Russia even after he is forced from office by term limits next year.

Hugo Chavez wasn’t as successful in his bid to rewrite the Venezuelan constitution, an effort to make himself leader (read dictator) for life, with his referendum failing by a narrow margin.

Both leaders have in the very recent past either threatened or, in the case of Putin, have actually cut off supplies of petroleum in order to further their geopolitical and economic goals. Putin’s victory by proxy in the Russian elections cements his hold for the foreseeable future and gives him the mandate to continue his policy of trying to re-exert Russian global influence. Russia’s vast supply of crude and natural gas gives him the weapons with which to wield even greater power on the world stage. Even the threat of supply interruptions out of Russia has the potential to roil the global markets and send prices even higher. Putin’s history of cutting off supplies to Belarus and Ukraine give significant weight to any threat.

Even with Chavez’s loss, he will remain in power until 2012 and given his track record of trying to consolidate power, surely this most recent attempt to cement his grip on the country will not be his last, and he will, without a doubt, continue to be belligerent. Just within the last month, he’s suggested that OPEC should become activist with crude supplies, cutting off nations which he views as enemies, and made a direct threat to cut off supplies to the US should he perceive any meddling in the Venezuelan election process. However, given that 1) Venezuela’s crude exports are about a third of Russia’s and 2) their heavy oil has limited market appeal as only a few refineries in the world can process it, Chavez, while more militant about using petroleum exports as a weapon to further his agenda, has less influence than Putin.

The bottom line is that even with the setback Chavez experienced this last weekend, he is still a loose cannon on the world stage and should he act and actually interrupt crude exports at any time for political purposes, his influence could be felt in the form of increased volatility and higher prices for crude and products. Many estimates place the current “security of supply” premium on crude oil somewhere between $20 and $40/BBL. If either Russia or Venezuela become more aggressive in using crude exports as a weapon of influence, there is little doubt that premium could double or triple.

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