High Price of Oil is Artificial

TEHRAN (AFP) The current high price of oil is artificial and the market is well supplied with crude, Iranian President Mahmoud Ahmadinejad said on Tuesday, pinning the blame on the sliding dollar.

"The rise in consumption is lower than the rise in production," Ahmadinejad told a meeting in the city of Isfahan of the Organisation of Petroleum Exporting Countries' (OPEC's) fund for international development.

"The market is well supplied but prices are rising and this situation is artificial and imposed" by world powers.

Ahmadinejad, who is president of OPEC's number two producer, has repeatedly said that the current high price of oil is not based on fundamentals and driven largely by the weakness of the dollar.

"Certain hands, for political and economic ends, are controlling the price in an artificial manner," he said.

Ahmadinejad also said "certain powers" were keeping an artificial oil price to "fund the costs of their wars and occupations and to justify investments to exploit new sources of energy at the bottom of the oceans, at the poles and elsewhere."

Oil prices have hit record highs of close to 140 dollars a barrel.

In Asian trade on Tuesday, the main New York futures contract, light sweet crude for July delivery, dropped 15 cents to 134.46 dollars per barrel after striking an intraday record of 139.89 dollars on the New York Mercantile Exchange.

Ahmadinejad's comments came a week ahead of a meeting orgainsed by OPEC kingpin Saudi Arabia in the Red Sea city of Jeddah to bring together major oil producers, including those outside OPEC, and consumers to discuss oil prices.

OPEC, which pumps some 40 percent of oil supplies and has been widely blamed for the five-fold rise in prices since 2003, insists the oil market is well supplied and that current prices do not reflect market fundamentals.

Ahmadinejad reiterated that the fall in the dollar was a prime cause of the world's economic problems, saying it had affected "the world economy and in particular the economy of world energy exporters."

Again showing his disdain for the greenback, Ahmadinejad reaffirmed his proposal to create a completely new currency which OPEC countries could use in oil transactions.

"The hard currency reserves of OPEC countries have been heavily affected" by the fall in the dollar, he said.

"I repeat my suggestion made six months ago at the OPEC summit in Riyadh to create a basket of credible currencies which would be the basis for oil transactions," said Ahmadinejad.

"Or alternatively, that OPEC countries create a new currency for their transactions."


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