OPEC leaders may discuss creation of currency basket to price crude

OPEC leaders may discuss creation of currency basket to price crude

The Associated Press
Friday, November 16, 2007

RIYADH, Saudi Arabia: Leaders of the Organization of Petroleum Exporting Countries meeting this weekend in the Saudi capital are likely to discuss the possibility of creating a currency basket to price their crude, Venezuela’s oil minister said Friday.

Rafael Ramirez, the minister, said the issue will come up at a closed session in the two-day OPEC summit, Dow Jones Newswires reported.

"The issue of the currency basket ... they will have an opportunity to discuss this in the closed session," Ramirez told reporters on the sidelines of the OPEC gathering.

A currency basket could be used as a way for the cartel to shield crude oil exports, which are priced in U.S. dollars, from the dollar’s decline against other major currencies.

OPEC supplies about four out of every 10 barrels on world oil markets.

The cartel’s leaders in Riyadh on Saturday and Sunday are to discuss the challenges a potential global recession, an anemic dollar, and rising environmental concerns to their near-US$1.8 billion a day in revenue.

Ecuador, with its half-a-million barrels a day of production, may also be formally welcomed back to the group this weekend.

The Dow Jones Newswires also reported that a statement at the end of the two-day gathering may include a communique on the dollar and its impact on oil prices.

Algeria’s Oil Minister Chakib Khelil, however, said Friday that the communique would not mention the weak dollar.

"The weakening of the dollar has an impact on the price of oil. We would like to see the dollar stabilize," he told reporters ahead of a closed ministerial session on the eve of the OPEC gathering.

"It isn’t mentioned in the communique," which he confirmed focused on stability of the oil market, energy and sustainable development, and the environment.

Some OPEC members have voiced concern about the dollar, in which their prime export product is priced, and are to call for studies to be conducted into the effects.

Proposals by both Venezuela and Iran to trade with oil in a basket of currencies in order to replace the historical link to the dollar have been put forward, but such calls haven’t found enough support from some in OPEC.

The group’s Secretary General Abdalla Salem el-Badri said earlier this week that the group wasn’t discussing changing the pricing of crude oil from dollars into other currencies.

"The OPEC Secretariat isn’t working on this issue, because it’s up to member countries to decide for themselves," el-Badri said.

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