OPEC's Dollar Concerns Overshadow Environmental Push (Update1)
By Ayesha Daya and Maher Chmaytelli
Nov. 18 (Bloomberg) -- The falling U.S. dollar's effect on oil revenues overshadowed Saudi Arabia's promises to fight global warming at this weekend's OPEC summit in Riyadh.
Saudi Arabia, considering a revaluation of the riyal against the dollar, had to fight off an attempt by Iran and Venezuela to get the group to discuss pricing oil in different currencies. Hosting the summit, King Abdullah committed $300 million to research climate change, while OPEC leaders pledged to cut emissions from oil and gas production.
The dollar's 10 percent decline this year has cut the buying power of revenue from record oil prices above $90 a barrel. A further drop may harden OPEC's reluctance to raise supply in a bid to ease prices. Ministers at the summit said the oil market was well-supplied and recent gains were due to speculation and beyond the group's control.
``OPEC is in a price paralysis conundrum,'' said John Sfakianakis, chief economist at Saudi British Bank, a unit of HSBC Bank Plc. ``They do care about the dollar, but if they say publicly they worry it will show they care even more.''
Gulf Arab countries, most of whose currencies are pegged to the U.S. dollar, will jointly consider a revaluation in December in a bid to combat inflation, Abdul Rahman al-Attiyah, the secretary general of the Gulf Cooperation Council said in Riyadh today. The council includes OPEC members Saudi Arabia, Kuwait, the United Arab Emirates and Oman.
``Everyone wants to discuss the dollar, but we don't know in what form to put it on the agenda,'' Algerian Oil Minister Chakib Khelil said in an interview yesterday. ``It is a very complex issue - it impacts economic growth, purchasing power.''
Final Declaration
The final declaration from OPEC's third heads of state summit reiterated the group's commitment to ensuring stable energy supplies and promise to reduce carbon emissions from oil and gas production, according to a draft of the statement.
``The stability of the oil market is essential,'' said the statement issued at the end of a summit read by the group's secretary general, Abdalla el-Badri.
OPEC energy ministers have their next meeting to discuss oil production in Abu Dhabi on Dec. 5.
The producers' club, which supplies more than 40 percent of the world's oil, is gaining influence on the back of high prices. Importing nations have transferred $3 trillion more to OPEC than they would have since 2001 had oil prices stayed near $20 a barrel, according to Goldman Sachs Group Inc.
To contact the reporter on this story: Ayesha Daya in Riyadh at
adaya1@bloomberg.net ; Or Maher Chmaytelli in Riyadh at
mchmaytelli@bloomberg.net
Last Updated: November 18, 2007 08:54 EST
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