"The difficulties faced by Opec members as a result of the falling US dollar remain a deep concern to the oil cartel. Despite a barrel of crude topping $100 in early January, the 13-member body has lost tens of billions of dollars in potential earnings since the turn of the century, as the greenback has fallen against other currencies.
In 2007, and despite record oil revenues, Opec producers are thought to have earned 10 per cent less than they would have if they had priced their oil in euros. The issue has often been raised on an informal basis by Iran and Venezuela, but Saudi Arabia has steered moderate GCC countries away from the issue, in recognition of its political sensitivity.
Yet the reality of lost revenues is becoming increasingly hard to ignore. Opec secretary general Abdalla el-Badri now recognises that a shift to the euro is becoming an increasingly viable proposition as the currency becomes more established.
A complete switch to the euro, however, would be a short-sighted move. Virtually all oil traded in the international markets is priced in dollars. And while that should not dictate future strategy on its own, nor should the dollar be ditched entirely.
The dollar may continue to fall, but in the future the same depreciation could easily hit the euro, yen or, indeed, any currency.
Pricing oil with a properly weighted basket of currencies may be the best solution.
Finding a consensus among Opec members on the balance of currencies in such a basket would test El-Badri's diplomatic skills. But it would provide a more stable long-term system than the current one.
Opec is not in a rush to make a decision affecting trillions of dollars of its members' revenues. But it is increasingly likely it will make the decision at some point."
[Read More]
0 comments:
Post a Comment