Opec nations clash over weak dollar

Opec countries meeting in Saudi Arabia clashed on Friday over the declaration to be made by leaders at this weekend’s summit, as Venezuela and Iran pushed for a statement on the impact of the weak dollar on the group’s revenues.

The disagreement was revealed when a ministerial meeting Friday afternoon, supposed to be in closed session, was accidentally broadcast live to reporters.

The Iranian and Venezuelan ministers called for more radical measures and a specific mention of the effect of the dollar to be added to the draft declaration.

But Saud Al-Faisal, the Saudi foreign affairs minister, warned the meeting: “The mere mention that Opec is studying the issue of the dollar is going to have an impact.”

He said a reference to the US currency in the declaration could cause the dollar to “collapse”.

Price hawks such as Iran have argued that the dollar’s fall justifies a higher oil price.

An Iranian official pointed out on Friday that in euros the average price of oil for the year to date was significantly below the average for last year.

Iran wanted to raise attention to the dollar’s problem, but it will not push harder to include it on the final declaration, an Opec delegate told the Financial Times. The draft agreed by ministers on Friday night did not include any reference to the dollar.

The leaked dispute overshadowed Opec’s plans to make a declaration that would establish the long-term future for oil in the world’s economy by promising to invest in new capacity and arguing that increased use of fossil fuels could be compatible with fighting climate change.

Rafael Ramirez, Venezuela’s oil minister, called for the heads of state to discuss the creation of an Opec development bank and a commitment to stronger co-operation between member countries’ national oil companies. The declaration should include not only technical issues but also “political issues”, Mr Ramirez said.

The final declaration will be agreed by the leaders of the Opec countries when they meet on Saturday and Sunday in Riyadh, the Saudi capital, to discuss the long-term policies of the oil cartel. The landmark summit, the third in the 47-year history of the organisation, had been expected to issue a declaration that would highlight the commitment of Opec to provide long-term security of supply.

However, the group has postponed to a ministerial meeting in Abu Dhabi in December any decision on short-term production levels in spite of strong pressure from consuming countries led by the US.

Opec has said that the market is well supplied and there are “not shortages of oil”. It has blamed speculation, the weakness of the US dollar and geopolitical tensions for the 50 per cent price increase since the beginning of the year. West Texas Intermediate crude oil on Friday rose $1.93 to $95.36 a barrel.

Speaking before the ministers met, Chakib Khelil, Algeria’s oil minister, highlighted the issue of security of demand for oil, saying that while Opec would promise to invest in new capacity, consuming countries should also assure the cartel that oil demand would not evaporate as a consequence of alternative energies and the fight against climate change.

He also suggested that Opec, which controls 40 per cent of the world’s oil output, would use its declaration to reposition itself at the centre of the climate change debate, pushing for technologies to clean up fossil fuels through capture and storage of carbon dioxide emissions.

Opec’s new position on climate change could be backed by a $1bn research fund. The idea has been proposed by current and former Opec officials, and is thought to be backed by Saudi Arabia.

The broadcast of Friday’s meeting was abruptly stopped by officials disconnecting television sets at the press room when they realised that the session had been made public.