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  • bluecheese4u bluecheese4u Nov 19, 2007 8:38 AM Flag

    "It's not a shortage of supply," said OPEC

    "It's not a shortage of supply," said OPEC

    No OPEC pledge to increase output
    Iran leader wants to replace dollar

    Compiled from Post news services

    RIYADH, Saudi Arabia - The Organization of the Petroleum Exporting Countries ended a two-day summit Sunday by pledging $750 million for research into climate change technology but without committing to increase oil output.

    The group's final declaration was overshadowed by a deadly explosion at a Saudi natural gas pipeline that killed 28 people and by a news conference Sunday in which Iranian President Mahmoud Ahmadinejad said that OPEC's members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar.

    "They get our oil and give us a worthless piece of paper," he said after the close of the summit in the Saudi capital. He blamed U.S. President George W. Bush's policies for the decline of the dollar and its negative effect on other countries.

    Venezuelan President Hugo Chavez echoed this sentiment Sunday, saying "the empire of the dollar has to end."

    Iran and Venezuela have proposed trading oil in a basket of currencies to replace the historic link to the dollar, but they had not been able to generate support from enough fellow OPEC members - many of whom, including Saudi Arabia, are staunch U.S. allies.

    Ahmadinejad further warned the United States that, "if someone has the audacity to want to harm Iran, the response by Iran will make them very sorry." He also dismissed U.S. economic sanctions against Iran, saying that the most recent measures taken against leading Iranian banks and companies controlled by the Revolutionary Guard would have little effect on the country.

    Ahmadinejad's comments at the end of a rare summit of OPEC heads of state exposed fissures within the 13-member cartel. They also highlighted the growing challenge that Saudi Arabia, the world's largest oil producer, faces from Iran and its ally Venezuela within the Organization of Petroleum Exporting Countries.

    On Friday, Saudi Arabia opposed a move by Iran to have OPEC include concerns over the falling dollar included in the summit's closing statement after the weekend meeting. Saudi Arabia's foreign minister even warned that even talking publicly about the currency's decline could further hurt its value.

    By Sunday, though, it appeared the kingdom had compromised: Though Sunday's final declaration delivered did not specifically mention the weak dollar, the organization directed its finance ministers to study the issue.

    OPEC officials spent the week asserting that oil inventories were ample and that financial investors and speculators were driving up the price. They urged Western regulators to make oil markets such as the New York Mercantile Exchange more transparent.

    "It's not a shortage of supply," said OPEC Secretary General Abdullah al-Badri. He said OPEC above all wanted prices to be stable.

    OPEC oil ministers could still decide to boost production modestly at their Dec. 5 meeting in Abu Dhabi, United Arab Emirates, if prices remain very high, but Badri said that there was no point in doing so if new supplies were simply going into inventories. He noted that U.S. refineries were operating at 87 percent of capacity.

    In addition, several officials argued that $100 a barrel for oil was a reasonable price when adjusted for inflation. Privately, however, several officials said they wished prices would plunge long enough to discourage investments in alternatives that have become economically viable as oil prices have risen.

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