OPEC Interested in Non-Dollar Currency

Ahmadinejad: OPEC Members Interested in Converting Cash Reserves Into Non-Dollar Currency

Sebastian Abbot
November 18, 2007

RIYADH, Saudi Arabia (AP) — Iranian President Mahmoud Ahmadinejad said Sunday that OPEC’s members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar, which he called a “worthless piece of paper.”

His comments at the end of a rare summit of OPEC heads of state exposed fissures within the 13-member cartel — especially after U.S. ally Saudi Arabia was reluctant to mention concerns about the falling dollar in the summit’s final declaration.

The hardline Iranian leader’s comments also highlighted the growing challenge that Saudi Arabia, the world’s largest oil producer, faces from Iran and its ally Venezuela within the Organization of Petroleum Exporting Countries.

“They get our oil and give us a worthless piece of paper,” Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed U.S. President George W. Bush’s policies for the decline of the dollar and its negative effect on other countries.

Oil is priced in U.S. dollars on the world market, and the currency’s depreciation has concerned oil producers because it has contributed to rising crude prices and has eroded the value of their dollar reserves.

“All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency,” Ahmadinejad said. “Some said producing countries should designate a single hard currency aside from the U.S. dollar … to form the basis of our oil trade.”

Venezuelan President Hugo Chavez echoed this sentiment Sunday on the sidelines of the summit, saying “the empire of the dollar has to end.”

“Don’t you see how the dollar has been in free-fall without a parachute?” Chavez said, calling the euro a better option.

Saudi Arabia’s King Abdullah had tried to direct the focus of the summit toward studying the effect of the oil industry on the environment, but he continuously faced challenges from Ahmadinejad and Chavez.

Iran and Venezuela have proposed trading oil in a basket of currencies to replace the historic link to the dollar, but they had not been able to generate support from enough fellow OPEC members — many of whom, including Saudi Arabia, are staunch U.S. allies.

Both Iran and Venezuela have antagonistic relationships with the U.S., suggesting their proposals may have a political motivation as well. While Tehran has been in a standoff with Washington over its nuclear program, left-wing Chavez is a bitter antagonist of Bush. U.S. sanctions on Iran also have made it increasingly difficult for the country to do business in dollars.

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Saudi minister warns of dollar collapse

Edmund Conway
London Telegraph
November 17, 2007

The dollar could collapse if Opec officially admits considering changing the pricing of oil into alternative currencies such as the euro, the Saudi Arabian foreign minister has warned.

Prince Saud Al-Faisal was overheard ruling out a proposal from Iran and Venezuela to discuss pricing crude in a private meeting at the oil cartel’s conference.

In an embarrassing blunder at the meeting in Riyadh, ministers’ microphones were not cut off during a key closed meeting, and Prince Al-Faisal was heard saying: “My feeling is that the mere mention that the Opec countries are studying the issue of the dollar is itself going to have an impact that endangers the interests of the countries.

“There will be journalists who will seize on this point and we don’t want the dollar to collapse instead of doing something good for Opec.”

After around 40 minutes press officials cut off the feed, which had been accidentally broadcast to the press room.

Prince Al-Faisal added: “This is not new. We have done this in the past: decide to study something without putting down on paper that we are going to study it so that we avoid any implication that will bring adverse effects on our countries’ finances.”

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Opec unites behind higher prices, Oil Sees $200 if Iran is Invaded
Huge Chavez predicts: “If the United States does a crazy thing of Invading Iran or attacking Venezuela again, the barrel of oil is not just going to reach $100 US Dollars it could make it to $200 US Dollars.”

Paul Gottfried
Financial Times
November 18, 2007

Opec leaders meeting at the weekend summit in Saudi Arabia have differed sharply over the group strategy and purpose, but have united in defence of high oil prices.

Hugo Chavez, the left-wing president of Venezuela, opened the summit welcoming oil prices at close to $100 a barrel, describing them as “fair”. He called for the group to be “an Opec for geo-politics, an Opec for revolution,” adding “Opec was born as a geo-political actor, not as an economic or technocratic bloc.”

He also reiterated his warning that oil could hit $200 a barrel if the US attacked Iran. King Abdullah of Saudi Arabia, the summit’s host, gave a very different view of Opec’s objectives, saying it was intended to protect both its members’ interests and the world economy, and praising the group for acting in a “moderate and wise manner.”

However, he also appeared to justify oil prices at their current levels, saying that taking into account inflation, prices were still “not yet at the level of the 1980s.”

The summit in Riyadh, Saudi Arabia, only the third in the group’s 47-year history, will not take any decisions on short-term production levels, which will be assessed at the next ministerial meeting in Abu Dhabi on December 5. It is instead intended to set Opec’s long-term strategy, focusing on securing a central role for oil in the world economy. The draft of the declaration to be issued on Sunday emphasizes priorities such as investment in production capacity and the need for consuming countries to provide assurances of future demand. The summit is due to resume at 1500 local (1200 gmt).

Abdalla el-Badri, Opec’s secretary-general, called in his speech to the summit on Saturday for “transparency and predictability in consuming countries’ energy policies,” to give oil producers the confidence to invest in new capacity.

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