EU-DIGEST

Oil producers set to cut output

The chief of the Organization of the Petroleum Exporting Countries (Opec) has said that there must be a "substantial" cut in output when the group meets in Vienna next week. "There will be a reduction in production at the next extraordinary meeting of Opec, and it will have to be a substantial one to get the balance right between supply and demand," Chakib Khelil, who is also Algeria's energy minister, said. "If it has to be 1.5 million barrels per day, or two million barrels per day, that's what it will be."

Labels: Oil Production, Opec

EURO versus DOLLAR: Iraq, the US trump to avoid a dollar collapse - by Alberto Cruz

With an exchange rate over US$1.51 against the Euro and a continuing depreciation against the Yen, the dollar is close to collapse. This is a theory that has been repeated for some time now (1) although it doesn't mean we are in the twilight of the current economic system nor in the antechamber of a crisis in capitalism's nerve centre. But we are witnessing a progressive weakening of the United States and this provokes movement, sometimes small but still significant, in what is really important : the progressive reduction of various countries' dollar reserves (right now 64.8% of the world's monetary reserves are held in dollars) and their transfer into other stronger currencies like Euros or Yen. That means fewer dollars in circulation and less financing for the US external debt of about 9 trillion dollars. In fact the dollar as the main currency for international trade and as the main reserve currency for different countries' Central Banks has lost almost 7 percentage points since 1999, dropping from 71% of all reserves that year to the current 64.8% now, which indicates that more and more countries are reducing their dependency on the US currency.

For the US to staunch this constant financial bleeding only one life raft remains : Iraq. That means increasing oil production in that country at all costs, ensuring its definitive return to OPEC on the same terms as OPEC's other members - since Iraq was paralyzed by the UN during the government of Saddam Hussein following the sanctions the country was subjected to - and above all, with Iraq's presence, reinforcing Saudi Arabia, which is under more and more pressure from the oil cartel's other member countries to stop using dollars as the only currency for oil transactions. When Ahmadinejad and Chavez made their proposal, the Saudis were the most reluctant to accept it or even to discuss it and managed to avoid even a tangential reference to the issue in the final declaration of that OPEC summit. But the reality is much more obstinate. Maintaining the alliance with the US is ever more costly in political and economic terms. In Saudi Arabia current inflation rates are the highest since 1980, running currently at 7%. In the United Arab Emirates, inflation is even higher at 9.3%. (3) The reason is none other than the weakness of the dollar in economies completely dollarized as those countries' are. That is what has led the Saudis finally to let their arm get twisted and to accept now a discussion about the dollar in the terms proposed by Venezuela and Iran.

Labels: Dollar, EU, euro, Iraq, Oil, Opec

Opec leaders meeting at the weekend summit in Saudi Arabia have differed sharply over the group strategy and purpose, but have united in defence of high oil prices. Hugo Chavez, the left-wing president of Venezuela, opened the summit welcoming oil prices at close to $100 a barrel, describing them as "fair". He called for the group to be "an Opec for geo-politics, an Opec for revolution," adding "Opec was born as a geo-political actor, not as an economic or technocratic bloc." He also reiterated his warning that oil could hit $200 a barrel if the US attacked Iran. King Abdullah of Saudi Arabia, the summit's host, gave a very different view of Opec's objectives, saying it was intended to protect both its members' interests and the world economy, and praising the group for acting in a "moderate and wise manner."

The draft declaration also address climate change, in an attempt to show that rising consumption of oil can be compatible with tackling the threat of global warming . King Abdullah on Saturday announced that Saudi Arabia would put up $300m for a new fund for environmental research, and called on other oil producing and consuming countries to contribute.

Labels: Opec

World Economy - Opec: Oil prices could reach $100 a barrel ``soon''. - by Mark Shenk

``OPEC can't do anything about the price,'' Venezuela's oil minister Rafael Ramirez said today in Riyadh, Saudi Arabia, where OPEC is holding a heads-of-state summit this weekend. Oil prices could reach $100 a barrel ``soon,'' he said. The December futures contract in New York expired today.

Saudi Arabia, the world's largest oil exporter, won't discuss pricing oil in currencies other than the U.S. dollar, Saudi Foreign Minister Prince Saud Al-Faisal said, speaking at a meeting of OPEC oil and finance ministers today. Venezuela and Iran have pushed for discussions on pricing oil in currencies other than the dollar. ``As for the monetary aspect and the dollar I would like to ask his Excellency, the minister of Iran, to leave this question to the appropriate party, the ministers of finance, without mentioning that we gave them this task so that there won't be negative impact from OPEC,'' Al-Faisal said today, speaking in reaction to an Iranian proposal to discuss the currency.

Labels: Oil, Opec

EURO - Dollar losing currency among Opec nations

With the rise of the euro, the appeal is to using a basket of currencies and, of course, the dollar's steady slide over the past few years, using the US currency to price oil is falling out of favour. At least that is what what Venezuela's Energy Minister Rafael Ramirez told reporters last Friday."The need to establish a basket of currencies... will probably be a point of discussion in the next Opec summit," Reuters reported Ramirez as saying.

Labels: Dollar, EU, euro, Opec