To euro or not: Should oil pricing ditch the dollar?<\/p>\n
Robert Koch, Agence France-Presse, Algiers<\/p>\n
As the U.S. dollar continues its slide against world
\ncurrencies, should oil, the most valuable global commodity, now
\nbe priced in euros?<\/p>\n
The Organization of Petroleum Exporting Countries (OPEC) is
\nhaving a think about the relative merits of abandoning the
\ngreenback for the European single currency, and some analysts
\nexpect it to be discussed at the powerful oil cartel's special
\nmeeting in Algiers on Tuesday.<\/p>\n
\"I would be surprised if the question was not examined\" in
\nAlgiers, a source close to OPEC said at the cartel's Vienna
\nheadquarters.<\/p>\n
OPEC's current secretary general, the Venezuelan Alvaro Silva,
\nrecently indicated that the question was being mulled by the 11-
\nmember group, which has massive influence over global oil prices
\nand production.<\/p>\n
\"We are speaking about negotiating for crude in euros. It is
\npossible that the organization will discuss this and take a
\ndecision at a given moment\", Silva said.<\/p>\n
Qatar's energy minister, Abdullah bin Hamad al-Attiya,
\nadmitted that oil-producing states were worried in mid-January,
\nwhen the euro hit an unprecedented high of US$1.2898. But, he
\nadded, \"the passage from one currency to another is a difficult
\ndecision.\"<\/p>\n
After its free-fall slide in January, the dollar has recovered
\nslightly to hover around 1.27 to the euro, but countries are
\nstill reeling from the currency instability while exporters who
\nprice their goods in dollars have complained of continued drop in
\nprofits.<\/p>\n
At OPEC's last meeting, held in Vienna in December, the member
\nstates -- responsible for one-third of the world's oil production
\n-- complained that their oil profits were down 25 to 30 percent
\ndue solely to dependence on the dollar.<\/p>\n
Adopting the euro, the currency of 12 of the European Union's
\n15 current members, would call for a major overhaul in world oil
\ntrading, but the idea has been circulating since before its
\nintroduction in 2002.<\/p>\n
At a conference on the \"hidden threats of currency crises\"
\nback in March 2001, Venezuela's ambassador to Russia Francisco
\nMieres-Lopez first publicly evoked a possible switch.<\/p>\n
\"With all this talking, the euro makes slowly and
\nsurreptitiously its way in the price fixing mechanism,\" an
\nanalyst at the Dresdner-Kleinwort-Wasserstein brokerage firm in
\nLondon said.<\/p>\n
\"What's more, Russia, one of OPEC's competitors, has been
\nthreatening for several months now to switch its oil market to
\neuros\", the source said.<\/p>\n
The question has now built into a behind-the-scenes battle of
\nminds at OPEC, which groups Algeria, Kuwait, Indonesia, Iran,
\nIraq, Qatar, Libya, Nigeria Saudi Arabia, the United Arab
\nEmirates and Venezuela.<\/p>\n
Post-war Iraq remains outside of the cartel's quota system,
\nwhich has currently fixed the group's output at 24.5 million
\nbarrels per day.<\/p>\n
Saudi Oil Minister Ali al-Nouaimi, whose country is considered
\nthe cartel's heavyweight, OPEC Secretary General Purnomo
\nYusgiantoro of Indonesia and Algerian Energy Minister Chakib
\nKhelil have ruled out switching to the euro.<\/p>\n
Their OPEC partners, however, are not as categorical.<\/p>\n
b\"If the dollar\/euro value remains the same in 2004 as in
\n2003, prices will climb to unrealistic levels,\" said Hojjatollah
\nGhanimifard, acting deputy for international affairs at the
\nNational Iranian Oil Company.<\/p>\n
A trader at the Rothschild bank in London added: \"Trading in
\npetrol involves enormous sums of money. If the dollar loses its
\nrole as a currency of reference, the United States, the world's
\nlargest oil importer, will no longer be able to have outside
\ncountries finance its abyssal trade deficit.\"<\/p>\n
He said it was unlikely that the price of crude would be
\nquoted in euros in the near future but down the line prices could
\nbe fixed in line with a \"basket\" of currencies -- \"dollar, euro
\nor yen\".<\/p>",
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