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Venezuela Wants to Move Away from Dollar Oil Prices

Reuters
Tuesday, 27 Nov 2007 | 8:12 AM ET

Venezuela on Tuesday called for oil to be priced and billed in currencies other than the weak U.S. dollar, which has eroded producer nations' purchasing power.

Energy Minister Rafael Ramirez also blamed the United States for record high oil prices, saying its political pressure on some oil-producing countries had helped push crude toward $100 a barrel.

OPEC should price its oil in a basket of currencies, rather than focusing on the dollar, Ramirez said in an interview with state television.

He was reinforcing a position Venezuelan President Hugo Chavez promoted this month at an OPEC summit in U.S. ally Saudi Arabia. The influential hosts objected and ensured the proposal gained little traction among the oil cartel's members.

"The oil price is at $100 a barrel, but what dollar are we talking about? It's a dollar that makes you laugh," said Ramirez, who will stake out a hawkish stance on oil prices at an OPEC meeting next month.

"The dollar has devalued and it is distorting the oil market because there is a financial crisis knocking on the U.S. door," he said.

Major currencies have made gains against the dollar this year and some economists worry a housing credit crisis could tip the United States into recession, although many others say its economy is robust enough to weather the problems.

Worries over tight supply for the Northern Hemisphere's winter over the next few months have pushed prices up. But traders also say there is a premium factored in on world markets over a U.S. campaign to curb Iran's nuclear program.

To a much smaller extent, Venezuela's fraying ties with its biggest customer, the United States, also reinforces worries in the market.

"The Bush administration has put so much (political) pressure on producers of oil and gas. What's the outcome of this pressure? High prices," Ramirez said.

The United States says producer nations, such as OPEC members, should increase output to ease price pressures.

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