Oil price defended

[UpInArms]

http://www.gulf-daily-news.com/Articles.asp?Article=68274&Sn=BUSI

Opec yesterday said it was seeking to defend higher oil prices to compensate for the impact on the members' purchasing power of the US dollar's decline on currency markets.

Saudi Oil Minister Ali Al Nuaimi said prices, now at $31 a barrel for US crude, were justified by the dollar's slump against other major currencies.

Speaking ahead of today's meeting of Opec countries, he warned that producers would need to cut output early next year to support crude markets.

"Current prices are right," said Al Nuaimi. "The dollar is weakening and purchasing power is quite weak so the price is OK."

The remarks indicate the dollar's dive over the past two years against the euro and the yen has reached the point where it is playing a central role in Riyadh's oil price policy thinking.

...more...

[weldon_berger]

1. Ain't that a surprise.

Thank goodness we invaded Iraq and stabilized the world oil markets. No wonder we aren't messing with the Saudis; lord help us all if those guys switch to Euros.

[Gman]

2. The benchmark used to be $25

The dollar has dropped at least as much as the 20%+ increase to $31. Makes sense to me.

BOHICA from Bush.