Chavez starts Opec meet with $200 oil warning

Chavez starts Opec meet with $200 oil warning

Riyadh: Venezuelan President Hugo Chavez opened an Opec summit on Saturday with a warning that oil prices could reach $200 if the US attacked Iran. In his speech , the fiery leftist also urged the cartel to be more political.

But internal divisions about the role of the oil exporters’ group were highlighted when King Abdullah of Saudi Arabia, OPEC kingpin and key US regional ally, sounded a moderate note, saying oil “must not become an instrument for conflict."

Chavez, a fiercely anti-US leader, warned crude prices could double from their current level of near $100 a barrel if Washington attacked Iran or launched action against Venezuela.

“If the US is mad enough to attack Iran or aggress Venezuela again the price of a barrel of oil won’t just reach $100, but even $200," he said.

He also urged assembled leaders from the Organisation of Petroleum Exporting Countries, meeting for only the third time in the cartel’s 47-year history, to club together for geopolitical reasons.

“Today Opec stands strong. It is stronger than it has ever been in the past," he said. “Opec should set itself up as an active geopolitical agent."

King Abdullah defended the aims of the cartel, which controls the output of its members to influence world crude prices, in a speech that was in stark contrast in content and style to the Venezuelan’s.

“Those who say that Opec is a monopolistic organization are ignoring the fact that Opec always behaves in a moderate and wise manner," he added.

He said proof of this was that current prices of near $100 per barrel were lower than the prices of the 1980s when inflation was taken into account.

Opec’s membership is dominated by pro-Western Gulf states but includes an anti-US bloc of Iran and Venezuela.

The group has a history of using its oil exports as a political weapon — members ceased exports in 1973 in protest at Israel’s invasion of Syria — but nowadays Saudi Arabia likes to stress the purely economic and technical agenda of the group.

The summit here is intended to map out the strategic direction of the OPEC, which produces 40% of world oil, but the group is divided on a number of issues.

Another leftist ally of Chavez in South American, Ecuador, sealed its widely expected return to Opec on Saturday, swelling the ranks of the group to 13.

Chavez — who opened the summit because he hosted the last Opec gathering in Caracas in 2000 — made a series of blistering attacks on the US and also posited that oil was the source of all conflict.

“The basis of all aggression is oil. It is the underlying reason," Chavez said, pointing to the war in Iraq and US threats against Iran because of the Islamic republic’s disputed nuclear programme.

The event comes at a time of tension on world oil markets, with the cartel under pressure to increase its output to help calm record crude prices that had threatened to breach $100 a barrel 10 days ago.

“Managing Opec politics growing forward is going to be increasingly difficult so long as antagonism between Iran and Venezuela and the US continues," said an analyst from US-based oil brokerage SIG, Yasser Elguindi, before Chavez’s speech.

“You have the anti-US crowd and the neutral crowd."

King Abdullah also announced Saudi Arabia, the world’s biggest oil producer, was to invest $300 million (€200 million) to develop technology to tackle climate change.

In a gaffe late Friday, a private meeting of Opec oil, foreign and finance ministers was mistakenly broadcast to journalists, which revealed other differences at the heart of the organization.

The footage showed Iran pushing for a reference to the falling dollar in a final communique to be issued by leaders at the end of the summit, providing a rare glimpse of the inner workings of the organisation.

Journalists witnessed Saudi Arabia reject the idea courtesy of a television in the media room that mistakenly had a live feed of the meeting.

The eavesdropping ended when a furious official emerged to switch off the broadcast.

The fall of the dollar, which has declined 15% in 12 months, has affected revenues of Opec members since most of them price and sell their exports in that currency.