International   

Oil price due to fake considerations: Iran

DUBAI: Iran’s President Mahmoud Ahmadinejad has urged OPEC member-states to detach themselves from the falling U.S. dollar and convert their cash reserves into a basket of currencies.

This was the second time in six months that Iranian President was calling upon top oil producing companies to dump the tumbling dollar. “I again repeat my previous proposal; we should have a basket of different international hard currencies as the basis or the member countries should come up and produce a new hard currency for petroleum contracts,” he said on Tuesday at a meeting in Isfahan of OPEC Fund for International Development (OFID). Analysts say that Mr. Ahmadinejad’s proposal, if pursued, would plunge the value of the dollar, which remains in high demand partly because countries across the globe pay for their oil in the U.S. currency.

“They get our oil and give us a worthless piece of paper,” Mr. Ahmadinejad said in Riyadh at the close of the OPEC summit.

He pointed to the negative impact of the depreciating dollar on petroleum exporting countries. He stressed that the fall in the value of the dollar had increased the prices of food grains such as wheat, rice and oilseeds .

He observed that the spike in oil prices, which had touched nearly $140 a barrel on Monday before dropping to $134.61 was not due to a drop in supply, but on account of artificial considerations. “At a time when the growth of consumption is lower than the growth of production and the market is full of oil, prices are rising and this trend is completely fake and imposed.”

Saudi Arabia has also emphasised that the market is well supplied with oil. It had announced over the weekend to raise its daily output by 200,000 barrels.

Iraqi Oil Minister Hussein Al-Shahrastani has attributed the surge in oil prices to massive speculation triggered by the U.S. subprime mortgage crisis. Speaking to the Arabic daily Al Hayat he said: “International companies, especially the ones with huge capital, which used to invest their funds in real estate markets or other places, were scared because of the recent real-estate crisis in America, which pushed them to invest their capital in oil by buying future contracts.”

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

Oil price due to fake considerations: Iran
Qingdao refinery operational
Nepal talks inconclusive
Bill on human rights in Sri Lanka
Ceasefire deal
Pakistan discloses defence outlay
Indian jailed for exporting banned U.S. military goods

Copyright © 2008, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu