Venezuela announced on Tuesday a pact to ship fuel to Nicaragua under preferential terms.
The pact said Venezuela would supply 10 million barrels of fuel a year to an alliance of Nicaraguan mayors, many from the leftist Sandinista party, including presidential candidate Daniel Ortega, who is opposed by Washington.
Venezuelan President Hugo Chavez said his country would accept 60 percent of payment within 90 days of shipment, while the remaining 40 percent will be paid off over 25 years at 1 percent interest, including a two-year grace period.
The deal will bring about the launch of a Nicaraguan-Venezuelan joint venture to oversee importing and commercializing the fuel.
Venezuela has signed oil deals with numerous Latin American and Caribbean nations, which have helped tighten ties with other leftist-minded political allies including Cuba.