insideoil

Cutting Off Oil to Spite Your Face

You miss a big point - in that while Chavez needs the money, he has bigger political needs to find an excuse for non-performance to his own voters. Politically EM is handing him a "perfect enemy", and providing just the cover he needs to hide the increasing dysfunction resulting from kicking out both in-house as well as ex-pat expertise. Army people are not trained to run plant- and it shows in reduced output.
As for encouraging the rest to follow - there are many looking for a good excuse not to put money into added production. It costs investment money just to maintain production, never mind meet the needs of a growing world economy - and others outside of the USA are clamouring for that supply.
If the oil price goes up due to reduced supply - there is not a lot to drive oil based economies to invest in more supply right now. The downside of reduced demand simply has not happened - and has been so far an empty caution. Project costs are overpriced right now - and every oil economy has been looking for ways to avoid immediate investment on added oil discovery or even downstream processing. Chavez will not find voluble support - more like just provide a convenient excuse for supporting countries to quietly overide or obfuscate past committments made on a political level.
The issues are not nearly as linear as you perceive them. I can readily believe $200/bbl - just as I believed $100/bbl when we were at $30/bbl just a few years back.