saudi fm defends dollar at opec meeting

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http://www.guardian.co.uk/world/2007/nov/18/oil.saudiarabia

Oil leaders’ private debate televised by mistake

Tim Webb in Riyadh

Sunday November 18, 2007

The Observer

‘Kill the cable, kill the cable,’ shouted the security guard as he burst through the double doors into the media room at the Intercontinental Hotel in Riyadh, followed by Saudi police. It was too late.
A private meeting of Opec leaders, gathered this weekend in Riyadh for the cartel’s third meeting in its 47-year history, had just been broadcast to the world’s media for more than half an hour after a technician had mistakenly plugged the TV feed into the wrong socket. The facade of unity that the cartel so carefully cultivates to a world spooked by soaring oil prices was shattered.

Sometimes, such innocent mistakes can have far-reaching economic and political consequences. Commodity and currency traders said this weekend that oil prices would surge again tomorrow - possibly breaking the $101 per barrel record set in the late 1970s - while the already battered dollar would fall further on the back of the unintentional broadcast.
On Friday night, during what the participants thought were private talks, Venezuela’s oil minister Venezuela Rafael Ramirez and his Iranian counterpart Gholamhossein Nozari, argued that pricing - and selling - oil using the crippled dollar was damaging the cartel.
They said Opec should formally express its concern about the weakness of the dollar when the cartel makes its official declaration at the close of the summit today. But the Saudis, the world’s largest oil producers and de facto head of Opec, vetoed the proposal. Saud al-Faisal, the Saudi foreign minister, warned that even the mere mention to journalists of the fact that leaders were discussing the weak dollar would cause the US currency to plummet.
Unfortunately his words and those of everyone at the meeting were being broadcast via a live television feed to a group of astonished reporters. ‘I couldn’t believe it,’ said one who was there. ‘When I realised they didn’t know they were being broadcast live, I frantically started taking notes.’
Opec only realised that the leaders’ row was being broadcast to the world when the Reuters news agency put out a report of the argument.
The weakness of the dollar is one reason why oil prices are so high, as cartel members seek to
compensate for their lower earnings. This means a further drop in the dollar is likely to be accompanied by a rise in oil prices.