Earlier this month, Robert Fisk of the Independent reported that Arab, French, Japanese, Russian and Chinese finance officials had held secret talks on switch from the dollar to a basket of currencies. This would be an extraordinary event, as the dollar has been the defacto international currency for nearly a century.
On top of that, Iran and Venezuela have been trying to convince OPEC to use the Euro instead of the dollar in crude oil pricing. Qatar has joined them because, like the Chinese, they're concerned about the fall of the value of the dollar.
The Saudis publicly insist on keeping the dollar but I think they must be privately concerned about the decline in the value of their dollars. The price of oil will rise as the dollar keeps falling, so the Saudis will want to increase oil output in the next Opec meeting in December in order to keep the price at around $75 which they set in December 2008, but they will be opposed by Iran and Venezuela and other countries that want to maintain high prices by cutting production. THe result could be a big split in OPEC. If the Saudis cave, the Saudi riyal may no longer remain pegged to the US dollar. This would have very important implications for the US dollar.
Do not expect the American representatives to the OPEC a.k.a "The Sauds" to abandon the dollar ... their puppeteer will not allow it ...
Posted by: Ismail Abushams | November 01, 2009 at 05:13 PM