Saudis fear that open discussion by OPEC could collapse dollar


Saudi Arabia Won't Include
U.S. Dollar in OPEC Talks

By Maher Chmaytelli and Fred Pals
Bloomberg News Service
Friday, November 16, 2007

RIYADH, Saudi Arabia -- Saudi Arabia, the world's largest crude oil exporter, rejected a proposal by Iran and Venezuela to discuss the weak dollar at this weekend's OPEC summit in Riyadh, saying it didn't want the U.S. currency to "collapse."

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 nearly 15 percent against the euro in the past 12 months.

"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 ministerial 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 in the past 10 1/2 months, hurting the international purchasing power of OPEC's dollar-based export revenues. Iran already sells some of its oil in other currencies.

Concern is growing that the dollar's weakness may augur the end of the U.S. currency's 62-year reign as the world's main international currency for trade, financial transactions and central-bank reserves.

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.

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