Monday, November 19, 2007
Chavez Warns US at Opec SummitAl Jazeera
Venezuela's president has warned that oil prices could more than double if the US attacks his country or Iran.
In his opening address on Saturday at a rare Organisation of the Petroleum Exporting Countries summit in Riyadh, the Saudi Arabian capital, he declared that the group should "assert itself as an active political agent".
"If the United States was mad enough to attack Iran or aggress Venezuela again the price of a barrel of oil won't just reach $100 but even $200 dollars," he said.
Saudi Arabia, the world's biggest oil producer, rebuffed Chavez's idea of Opec becoming an overtly political organisation.
"Oil is an energy for development, it should not become a tool for conflict and emotions," King Abdullah, the Saudi monarch, said.
Chavez is due to arrive in the Iranian capital Tehran on Sunday to hold talks with Mahmoud Ahmadinejad, Iran's president.
The two-day summit is only the third in Opec's 47-year history.
Oil, finance and foreign ministers of Opec are meeting against a backdrop of a depreciating US dollar and tension in world oil markets.
Chavez said on Saturday: "I think Opec should strengthen itself in this capacity and demand respect for the sovereignty of our nations, if the developed world wants a guaranteed supply of oil. We are witnessing constant threats against Iran."
In his speech, King Abdullah said: "Those who say that Opec should be a manipulative monopoly are ignoring the fact that Opec had always behaved moderately and wisely."
The Saudi king also tried to redirect the Opec opening session to the summit's agenda, announcing a move to support environmental efforts.
He said: "I wish to announce that the Saudi government has put $300m in a programme to finance scientific research in the fields of energy, environment and climate."
As the talks entered a second day on Sunday, other Opec members had not committed to the Saudi plan.
Rafael Correa, president of Ecuador, which has rejoined Opec after a 15 year break, proposed that a tax be imposed on oil-consuming nations for environmental protection programmes elsewhere.
Earlier this week, Samuel Bodman, the US energy secretary called on Opec to increase production in order to halt oil price rises.
But Opec officials said they will not discuss whether to increase oil supplies until the group meets next month in the United Arab Emirates.
They also cast doubt on the effect any output hike would have on oil prices, saying the recent rise has been driven by the falling US dollar and financial speculation by investment funds, rather than any supply shortage.
Saudi Arabia, a close US ally, objected on Saturday to an attempt by Iran and Venezuela to highlight concern over the weakness of the US dollar.
A closed session of foreign and finance ministers voted against the proposal.
Abdalla Salem el-Badri, the Opec secretary-general, said the group had decided not to mention concern over dollar depreciation in the declaration.
Saud al-Faisal, the Saudi foreign minister, told the session: "My fear is that any mention that Opec makes of studying the issue of the dollar will in itself have an impact."
A microphone mistakenly left on meant that the comments of al-Faisal were accidentally broadcast to journalists on Saturday.
He rejected the proposal by Iran and Venezuela who wanted the meeting to discuss the weak dollar, saying: "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."
Embarrassed organisers switched off the microphones after the comment.
Opec is under pressure to increase its output to help calm record crude prices that reached almost $100 a barrel for the first time last week.
Some Opec members want to increasingly sell their oil in euros and not dollars.
The Gulf Arab states and Saudi Arabia earn more than a billion dollars a day from oil sales.
Mamdouh Salameh, an international oil expert, told Al Jazeera: "Saudi Arabia and Kuwait are under the US military umbrella. Consequently, it will be anti-American decision if they shift to another currency other than the dollar."
Concern is growing, however, that the dollar's weakness signals the end of its reign as the world's main international currency.
The dollar would be further damaged if Opec started selling its oil in euros or created a basket of currencies as some producers now want.
Saudi Arabia's investments in the US - and many other countries - are also threatened by a weaker dollar.
The dollar has fallen 10 per cent against the euro this year, hitting oil producers' income.
The falling dollar has also made imports much more expensive, with Gulf countries particularly affected.
Inflation has risen dramatically, affecting low paid foreign workers especially hard.
Now Gulf currencies, such as the UAE dirham which has been pegged to the dollar for the past 30 years, could be unpegged because of growing pressure.
Links to this post: