Sun, Nov 18, 2007 - Page 10 News List

OIL: OPEC blunder reveals conflict

OOPS It was revealed Saudi Arabia fears that a push by Iran to issue an OPEC statement expressing concern about the US dollar could lead to that currency's collapse


The Kingdom Tower is lit up in Riyadh, Saudi Arabia, on Friday. Saudi Arabia hosts the third OPEC Summit this weekend.


A blunder by OPEC on Friday exposed a spat between Saudi Arabia and Iran about whether the oil exporters' group should address the issue of the falling US dollar at a rare summit of leaders this weekend.

Saudi Arabia appeared to have prevailed and the US dollar is not expected to be mentioned in a final declaration by leaders, but the incident highlighted differences at the heart of the group, which includes both US allies and foes.

In an embarrassing oversight, a private meeting of foreign, finance and oil ministers from the 12 members of OPEC was broadcast for 30 minutes on closed-circuit television in the media room.

Journalists witnessed Iran request that the final declaration to be issued by OPEC leaders at the end of the summit today should express the concern of member states about the falling US currency and its impact on oil revenues.

Reacting to the proposal, Saudi Foreign Minister Prince Saud al-Faisal warned that mentioning the falling US dollar could lead to the "collapse" of the US currency.

"There are media people outside waiting to catch this point and they will add to it [exaggerate] and we may find that the dollar collapses," he said.

Prince Saud, who was chairing the meeting to draw up the declaration before leaders arrived yesterday, described the Iranian proposal as "sensitive."

"This is a sensitive issue. It will cause the dollar to drop further, thus complicating the problems we are facing from the dollar's fall," he added.

As the meeting broke up and ministers left, OPEC's secretary general was adamant that the US dollar would not be mentioned in the final communique.

"Let me be clear: The dollar will not be in the final statement," he told reporters.

"It [the dollar] is an individual country issue," he added, meaning the subject would not be tackled at the level of OPEC, which groups 12 oil-producing countries.

Iranian Foreign Minister Manouchehr Mottaki said during the meeting that OPEC should express concern over "the continued depreciation of the US dollar" in an initiative backed by fellow US adversary Venezuela.

The fall of the US dollar, which has declined by about 15 percent in 12 months, has affected the revenues of OPEC members because most of them price and sell their oil exports in the US currency.

Saudi Arabia, the world's biggest oil producer, insists that OPEC remain a purely economic forum despite efforts by hawks in the organization, with Venezuela the leader, to politicize it.

The remarkable insight into the inner workings of OPEC, which produces 40 percent of world oil, ended when a furious official emerged to switch off the television.

The summit, which began yesterday, is only the third gathering of OPEC head of states in the organization's 47-year history.

The gathering comes at a time of tension on world oil markets, with the cartel under pressure to increase its output to help calm record crude prices that threatened to breach US$100 a barrel for the first time last week.

Venezuelan Energy Minister Rafael Ramirez forecast on Friday that prices would soon break through the symbolic US$100 barrier. They are currently in the mid-US$90 range.

"We have been saying for years that oil is going to reach US$100 a barrel and it seems that is going to happen soon," he told reporters.

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