OPEC to study effect of weak U.S. dollar on oil prices
OPEC will study the weak U.S. dollar's effect on the oil cartel's earnings and investigate the possibility of a currency basket, Iran's oil minister said Sunday.
"We have agreed to set up a committee consisting of oil and finance ministers from OPEC countries to study the impact of the dollar on oil prices," Gholam Hussein Nozari told Dow Jones Newswires at a rare heads-of-state OPEC summit.
Iraqi Oil Minister Hussein al-Shahristani also confirmed that the Organization of Petroleum Exporting Countries was forming the committee, which would "submit to OPEC its recommendation on a basket of currencies [to price their crude], that OPEC members will deal with."
He did not give a timeline for the recommendation.
Oil is priced in U.S. dollars on the world market, and the currency's depreciation has concerned oil producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.
Cartel officials have resisted pressure to increase oil production to ease prices.
They have also cast doubt on the effect any output hike would have on oil prices, saying the recent rise has been driven by the falling dollar and financial speculation by investment funds rather than any supply shortage.
Though a final statement issued Sunday at the end of the summit did not specifically mention the dollar or a committee, it did say the oil-producing group would look into ways of improving financial co-operation.
OPEC will "study ways and means of enhancing financial co-operation among OPEC ... including proposals by some of the heads of state and governments in their statements to the summit," OPEC Secretary General Abdalla Salem el-Badri said, reading the statement.
Iran and Venezuela have been pressuring OPEC to study the effect of the falling dollar.
But the suggestions were met with resistance from other OPEC members, including Saudi Arabia's foreign minister, who warned Friday that even talking publicly about the currency's decline could further hurt its value.
During his final remarks, el-Badri stressed he was committed to supply, but did not mention changing oil outputs, as expected.
"We affirm our commitment ... to continue providing adequate, timely, efficient, economic and reliable petroleum supplies to the world market," he said.
The run-up to the meeting was dominated by speculation over whether OPEC would raise production following recent oil price increases that have closed in on $100 a barrel.
U.S. Energy Secretary Samuel Bodman called on OPEC to increase production earlier this week, but cartel officials have said they will hold off makingany decision until the group meets next month in Abu Dhabi, United Arab Emirates.
The meeting in Saudi Arabian capital of Riyadh, with heads of states and delegates from 12 of the world's biggest oil-producing nations, was only the third full OPEC summit since the organization was created in 1960.
Libya's oil policy head, Shokri Ghanem, confirmed to Dow Jones that Libya is to host the next heads of state summit in 2012.