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Arab Oilmen Blame U.S. for Pricey Crude
Don’t wait for oil producers to pump the U.S. economy out of its economy dead-end, says the head of oil cartel OPEC.
In fact, if want cheaper oil, fix the broken U.S. dollar, say cartel leaders.
That’s because it’s the weak dollar, not oil supply, that’s driving crude to record levels, recently closing to $118 a barrel. As the dollar slips, producer countries must charge more to stay ahead of the slide in the currency’s value.
“When the dollar loses 1 percent, the price of a barrel of oil rises by four dollars,” OPEC President and Algerian Minister for Energy and Mines, Chakib Khelil, said in press reports.
The solution is not for OPEC to increase production, Khelil said. When OPEC raised production in 2007, prices stayed high.
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“Any increase in production now will not have an impact on prices because there is a balance between supply and demand,’” Khelil said during a visit to the Kuwait Chamber of Commerce and Industry.
Khelil blames the U.S. for high crude oil prices, which have doubled in the past three years.
OPEC Secretary-General Abdalla el-Badri echoed Khelil’s sentiment but also placed part of the responsibility on commodity traders.
“As long as these factors keep contributing to the market, we may see higher prices,” said el-Badri in Rome, where he is attending the three-day International Energy Forum.
El-Badri said the problem is not a lack of oil in the market. Prices will not drop just because there is more oil on the market.
He added that, although the U.S. may be hard-hit by expensive oil, Asia’s demand for oil will not decrease even at current high prices.
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Pleas from U.S. and European politicians to increase the production of oil have fallen on deaf ears. OPEC officials, including Saudi Arabian Oil Minister Ali al-Naimi, have turned down requests, blaming the politicians instead.
The pressure to increase the amount of oil is “probably politically driven,” said al-Naimi, reported oil newsletter Argus.
Qatari Oil Minister Abdullah bin Hamad al-Attiyah also dismissed calls to increase production, saying that customers are not asking for more oil.
He placed the blame solely on the declining dollar.
“The oil price rises as the dollar gets weaker,” he told Bloomberg.
Oil speculators are also adding an exorbitant fee to the already expensive oil, he said.
Rumors and speculation are increasing the cost of each barrel by about $20, Shokri Ghanem, chairman of Libya’s National Oil Corp., said in a Bloomberg Television interview