Market Full Of Oil: The USD VS Crude Oil Experience
Posted on June 25, 2008
By Hashem Kalentari
ISFAHAN, Iran (Reuters) – The oil market is plentifully supplied and the rally to record high prices is “fake and imposed”, Iran’s president said on Tuesday, blaming a weak U.S. dollar which he suggested was being pushed lower on purpose.
“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,” Mahmoud Ahmadinejad said.
“It is very clear that visible and invisible hands are controlling prices in a fake way with political and economic aims,” he said when opening a meeting of the OPEC Fund for International Development in the central city of Isfahan.
With high fuel prices sparking protests worldwide, Ahmadinejad hit out at energy taxes in consumer nations. He said there was an “unfair” difference in income between energy exporting and importing countries.
Iran, the world’s fourth-largest oil exporter, has repeatedly said the market is well-supplied with crude and blames rising prices on speculation, a weak dollar and geopolitical factors.
Oil steadied on Tuesday after touching a record near $140 the previous day, with traders caught between a weaker dollar and expectations that top exporter Saudi Arabia will ramp up output to its highest rate in decades.
Iran has often said it sees no need for the Organization of the Petroleum Exporting Countries (OPEC) to boost output, as the United States and other big oil consumers want.
“As you know the decrease in the dollar’s value and the increase in energy prices are two sides of the same coin which are being introduced as factors behind the recent instability,” Ahmadinejad said.
The president reiterated his view that oil should be sold in a basket of currencies rather than dollars, an idea which has failed to win over other OPEC members, except Venezuela.
“The ever-increasing decrease in the dollar’s value is one of the world’s major problems,” he said.
“A combination of the world’s valid currencies should become a basis for oil transactions or (OPEC) member countries should determine a new currency for oil transactions,” he said.
He expressed support for a proposal by Venezuela’s anti-U.S. President Hugo Chavez to create a bank constituted by OPEC members to act as a counterweight to U.S. influence in the world. He also advocated the establishment of an oil bourse.
Iran, embroiled in a standoff with the West over its nuclear programme, has for more than two years been increasing its sales of oil for currencies other than the dollar, saying the weak U.S. unit is eroding its purchasing power.
Ahmadinejad, who has called the dollar a “worthless piece of paper”, suggested a part of its decline was deliberate, without naming any country:
“The planners for some big powers are acting to decrease the dollar’s value,” he said. “For years they imposed inflation and their own economic problems on other nations by injecting the dollar without any support to the global economy.”
Foes since Iran’s 1979 Islamic revolution, Tehran and Washington are also at odds over Tehran’s disputed nuclear activities. Iran says its atomic work is peaceful.
(Reporting by Zahra Hosseinian in Tehran; Writing by Fredrik Dahl; Editing by William Hardy)