Opec leaders meet in Riyadh

SATURDAY, NOVEMBER 17, 2007
12:56 MECCA TIME, 9:56 GMT
Opec leaders meet in Riyadh

The two-day summit in Riyadh is only the third in
the organisation's 47-year history

Oil, finance and foreign ministers of the Organisation of the Petroleum Exporting Countries (Opec) are in the Saudi capital Riyadh for a rare meeting against the backdrop of a depreciating dollar.

The two-day summit, only the third in Opec's 47-year history, will not discuss whether or not to increase oil supplies in order to cool high prices.




The gathering comes at a time of tension in world oil markets.

In a closed session of foreign and finance ministers, Saudi Arabia, a close US ally, objected to a bid by Iran and Venezuela to highlight concern over the weakness of the US dollar.







The group voted the proposal out.

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."

Microphone mix-up

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."

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Embarrassed organisers switched off the microphones when they discovered their blunder.

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."

House divided

Saudi Arabia, the world's biggest oil producer, insists that Opec remain a purely economic forum despite efforts by some member countries to politicise it.

Hugo Chavez, the Venezuelan leader, has said he wants Opec to take on a stronger "political and geopolitical" role and says it must find a way to compensate the world's poorest countries for high oil prices.

The summit will instead focus on tackling climate change, long-term reliability of oil supplies, and energy's role in the developing world.

Any decision on increasing Opec output will be made in a meeting in Abu Dhabi next month.

Dollar's weakness

Concern is growing, however, that the dollar's weakness signals the end of its reign as the world's main international currency. And the greenback 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. This has hit oil producers and slashed income.

The falling dollar has also made imports - which countries especially in the Gulf rely on - much more expensive.

Inflation has rocketed, hitting the huge numbers of 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.




Source: Al Jazeera and agencies