Saudi Arabia won't discuss pricing oil in currencies other than the dollar, Saudi Foreign Minister Prince Saud Al-Faisal said, speaking at a meeting of oil and finance ministers today that was accidentally broadcast to journalists.
The Organization of Petroleum Exporting Countries, which pumps more than 40 percent of the world's oil, has seen its revenue diminish because of the decline in the dollar over the past three years. OPEC holds a heads of state summit in Riyadh tomorrow.
``As for the monetary aspect and the dollar I would like to ask his Excellency, the minister of Iran, to leave this question to the appropriate party, the ministers of finance, without mentioning that we gave them this task so that there won't be negative impact from OPEC,'' Al-Faisal said, speaking in reaction to an Iranian proposal to discuss the currency.
Some OPEC members have said they will consider increasing transactions in euros. The dollar has fallen almost 15 percent against the euro in the past 12 months.
Broadcast Blunder
``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,'' Al-Faisal said.
The minister's comments were broadcast from a closed meeting before Saudi authorities unplugged the live broadcast. The blunder was discovered after just over half an hour. The main protagonists in the debate were Venezuelan Energy Minister Rafael Ramirez, Iranian Foreign Minister Manouchehr Mottaki and Saud al-Faisal, each one talking in their own language.
Earlier in the broadcast, Venezuela, the fourth-largest producer in OPEC, had said it backs Iran's proposal to discuss pricing oil in other currencies.
``We're backing this Iranian proposal,'' Ramirez said.
The dollar slid to a record low of $1.4752 against the euro on Nov. 9 and has fallen versus 15 of the 16 most actively traded currencies tracked by Bloomberg this year, hurting the international purchasing power of OPEC's dollar-based export revenue. Iran already sells some of its oil in other currencies.
Crude oil for December delivery rose $1.38, or 1.5 percent, to $94.81 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange.
Dollar Weakness
Concern is increasing that the dollar's weakness may augur the end of the U.S. currency's reign as the world's main international currency for trade, financial transactions and central-bank reserves. The dollar's share of global reserves fell from 71 percent in 1999 to 64.8 percent in the second quarter this year, according to a report from the Washington- based International Monetary Fund.
``If oil was traded in something else than the dollar it would accelerate the long-term diversification trend out of the currency,'' said Meg Browne, a senior currency strategist at Brown Brothers Harriman & Co. in New York. ``But the chances of that happening is small -- it's simply not convenient for these countries when so much of their economies is priced in dollar.''
OPEC has no plans to price oil in any currency other than U.S. dollars even though the currency has fallen to record lows, OPEC Secretary-General Abdalla Salem el-Badri said Nov. 14. The heads of state summit, the third in OPEC's 47-year history, will include Saudi Arabia's King Abdullah and Venezuelan President Hugo Chavez.
The group of countries will release a statement after the meeting ends this weekend.
`Everybody's Position'
``It was not in the declaration in the first place and it won't be in the final declaration, period,'' el-Badri said to journalists. ``It's not Saudi Arabia's position, it's everybody's position.''
The United Arab Emirates may end its 30-year-old peg to the dollar and link the dirham to a basket of currencies to help stem inflation, central bank Governor Sultan Bin Nasser al- Suwaidi said in an interview in Gwacheon, South Korea, on Nov. 15. Inflation has risen to the fastest pace in at least five years.
Kuwait abandoned its peg to the dollar in May for a basket of currencies that include the dollar. Russia, the world's biggest energy producer, manages the ruble to a basket consisting of 55 percent dollar and 45 percent euro.
by Fred Pals in Riyadh and Maher Chmaytelli in
