Dollar rifts deepen at Opec By Ed Crooks and Javier Blas in Riyadh
Opec agreed yesterday to keep talking about the effects of the weak US dollar in an effort to bridge deep divisions exposed at the oil cartel's summit in Riyadh.
Ministers from Opec countries are expected to meet in the next few weeks to study further the effect of the falling dollar on their economies.
Iran and Venezuela, the two Opec countries most hostile to the US, have pushed for the cartel to consider pricing oil in currencies other than the greenback.
Saudi Arabia, the summit's host, has opposed the move, and fought to keep any mention of the dollar out of the summit's closing declaration.
Mahmoud Ahmadi-Nejad, Iran's president, said after the leaders' meeting that the falling dollar meant oil producers were subsidising the US. "They get our oil and give us a worthless piece of paper," he said. "We all know that the US dollar has no economic value," he said.
Hugo Chávez, Venezuela's president, said: "The fall of the dollar is not the fall of the dollar, it's the fall of the North American empire; we have to be prepared for that."
The dollar has dropped 16 per cent this year against a basket of major currencies, and 44 per cent against the euro since the last Opec summit in Caracas, Venezuela, in 2000. Iranian officials have said the average price of a barrel of their oil so far this year is, at $63, only $2 higher than for the same period of 2006. Priced in euros, oil has been cheaper this year than last.
The leaders agreed to "instruct our petroleum/energy and finance ministers to study ways and means of enhancing financial co-operation among Opec member countries, including proposals by some of the heads of state and government in their statements to the summit."
On Friday, Prince Saud Al-Faisal, Saudi Arabia's foreign minister, warned that the dollar could "collapse" if the US currency was mentioned in the declaration. His remarks - made in what was supposed to be a closed ministerial meeting - were accidentally broadcast to reporters.
After the summit, Prince Saud played down the significance of the ministers' further examination of the dollar problem, saying they would concentrate on wider global financial turmoil.
He added: "Everybody is very anxious in the international community . . . Hopefully we can find a way to safeguard our economies in these uncertain times."
Iran's and Venezuela's proposal would not necessarily drive the dollar down. Iran notionally prices most of the oil it sells in euros, but in practice receives a dollar price in world markets.
But a move by Opec away from the dollar would be taken in financial markets as a signal that member countries might shift their holdings of foreign exchange reserves away from the US currency. It would also mean the price of oil in dollar terms would rise as the dollar fell.
The dispute over the dollar reflected the differences between leaders who are united by little other than their oil reserves.
Mr Chávez gave a speech calling for a "revolutionary Opec" that contrasted sharply with King Abdullah of Saudi Arabia's promises of support for the world economy.
The declaration focused on the issues on which the leaders could agree: principally the need to secure the long-term place of oil in the world economy by assuring consumer countries that supplies will be available to meet their needs, and addressing the effects of oil and other fossil fuels on climate change.