OPEC blunder reveals Saudi-Iran disagreement on dollar

[metalman]

OPEC blunder reveals Saudi-Iran disagreement on dollar

RIYADH (AFP) - A blunder by OPEC on Friday exposed a disagreement between Saudi Arabia and Iran about the falling dollar when a private meeting of ministers was broadcast to journalists by mistake.

In an embarrassing oversight, the private meeting of foreign, finance and oil ministers from the 12 members of the Organisation of Petroleum Exporting Countries was broadcast for 30 minutes on closed-circuit television in the media room.

"There are media people outside waiting to catch this point and they will add to it (exaggerate) and we may find that the dollar collapses," he said.

Member states should express concern over "the continued depreciation of the US dollar" in the final declaration, Mottaki said.

--

so that's how the do it!

[Uncle Jack]

Re: OPEC blunder reveals Saudi-Iran disagreement on dollar

The fall of the US dollar, which has declined by about 15 percent in 12 months, has affected the revenues of OPEC members because most of them price and sell their oil exports in the US currency.

What a load of crap. The dollar has declined by 15%, but what percentage has oil risen over the same time period? It only needs to have risen by 17.6 percent to keep par. Has oil increased by at least 17.6%?

Anyone?

100 - 15 = 85;
15/85 = 0.176

[rj1]

Re: OPEC blunder reveals Saudi-Iran disagreement on dollar

What a load of crap. The dollar has declined by 15%, but what percentage has oil risen over the same time period? It only needs to have risen by 17.6 percent to keep par. Has oil increased by at least 17.6%?

Anyone?

100 - 15 = 85;
15/85 = 0.176

But the value of the dollars they received last month for their oil is not worth now what they were then.

It's the case of the goods becoming worth more than the money after the fact.

[blazespinnaker]

Re: OPEC blunder reveals Saudi-Iran disagreement on dollar

OPEC blunder reveals Saudi-Iran disagreement on dollar

RIYADH (AFP) - A blunder by OPEC on Friday exposed a disagreement between Saudi Arabia and Iran about the falling dollar when a private meeting of ministers was broadcast to journalists by mistake.

In an embarrassing oversight, the private meeting of foreign, finance and oil ministers from the 12 members of the Organisation of Petroleum Exporting Countries was broadcast for 30 minutes on closed-circuit television in the media room.

"There are media people outside waiting to catch this point and they will add to it (exaggerate) and we may find that the dollar collapses," he said.

Member states should express concern over "the continued depreciation of the US dollar" in the final declaration, Mottaki said.

--

so that's how the do it!

"reveals" ... like there is anything actually revealed!

[GRG55]

Re: OPEC blunder reveals Saudi-Iran disagreement on dollar

What a load of crap. The dollar has declined by 15%, but what percentage has oil risen over the same time period? It only needs to have risen by 17.6 percent to keep par. Has oil increased by at least 17.6%?

Anyone?

100 - 15 = 85;
15/85 = 0.176

Just a couple of point outs.
1. Very little physical oil exchanges between buyer and seller at spot price. The renewed backwardation (future delivery months are discounted to current spot) in crude futures (after 3 years of contango) amplifies this price difference.
2. The price that most people are familiar with is the NYMEX West Texas Intermediate contract at Cushing, OK. Middle Eastern crude is heavier, has higher sulphur content, and therefore sells at a discount (often a steep discount due to increasing volatility of the markers as their production sources deplete) to US WTI or Europe's Brent marker crudes which are lighter and sweeter (e.g. higher quality). I'm not aware that Dubai marker or OPEC Basket has never traded near $100.



Here's a short excerpt from Platts for those interested:

WTI is widely used in the pricing of US domestic crudes, as well as oil imports into the US. Brent has become the de facto international oil benchmark partly because of its location and partly because it is a good quality oil that can be used by a wide range of refineries. The physical value of North Sea Brent ('dated Brent') is widely used in benchmarking the bulk of oil from the North Sea, West and North Africa, Russia and Central Asia, as well as large volumes from the Middle East heading into western markets. Dubai, meanwhile, is a medium heavy, low sulfur crude typical of the grades produced in the Persian Gulf, but distant from consuming centers. As a result, it tends to sell at a lower price than Brent and WTI.

In recent years, the production level of each of the marker crudes has fallen; and in the case of Dubai, it has fallen drastically. Meanwhile, the proportion of heavier and sourer (lower sulfur) crudes that change hands in the term market have grown relative to light sweet production. More than half the world's produced oil is heavy and sour in quality and this proportion is expected to increase.

Middle Eastern crudes, typified by the heavy sour volumes that flow through the Strait of Hormuz, have grown in importance as a supply source for markets in both east and west. The dominant role of Saudi Arabia, the world's largest oil exporter, has been a factor in this, as the kingdom has the only immediately available spare capacity among OPEC members. Meanwhile, Russia has emerged as a major supplier to western markets after a period of decline in the early 1990s. Most of the oil exported from Russia is also relatively heavy and sour in quality.

And here's another reason the refining business ranks right up with airline transport as among the worst possible businesses to ever invest in:

Whereas supply has typically become poorer in quality, with more heavy and more sour crude in the mix, demand for products has veered the other way; demand for light products has grown most rapidly, whereas demand for residual fuels from utilities has declined mainly because of substitution by gas. Meanwhile, the quality requirements for light products have become ever more strict. Sulfur levels in transportation fuels have tightened relentlessly, a trend which has accelerated since 2000 when leaded fuel was outlawed within the EU. In gasoline and diesel, the sulfur limits are now below 50 ppm in Europe and the US, and similarly tight rules apply in many of the industrialized Asian countries. Much of the developing world is heading in the same direction, albeit at a slower pace.