The politics of OPEC’s Riyadh summit

They told the world in clear terms that they would use their oil to fight America whose economy could be badly hit if there is any disruption to supply or if ocean going vessels are not allowed to pass through the Arabian Gulf to supply crude to the west.

President Hugo Chavez of Venezuela warned of the foolishness of attacking Iran by America. He said this would cause the price of crude oil to hit $200 per barrel. At over $80 per barrel the world has become unsettled as it feared that this situation might shrink demand for the commodity. It has also made the consumer nations to call on exporter groups to ease the price pressure by providing the market with crude oil. But Chavez said at $100 per barrel the price is fair enough.

OPEC is of the opinion that it should be a more active geopolitical agent and demand more respect for its members and ask powerful nations to stop threatening it.

Earlier at the meeting of foreign ministers which preceded the summit, Iran and Venezuela, it was learnt, had opened another vista of controversy when they asked the group to reconsider its position on whether oil should continue to be valued in the United State dollars considering the weakening currency. This particular issue engaged the foreign ministers of participating countries for more than three hours behind closed doors.

Apparently apprehensive about the moves by Iran and Venezuela, Saudi Arabia, Nigeria and Qatar representing the moderate group swiftly moved to ensure that other members were not stampeded into accepting what they considered a dangerous move by the radical group.

Describing the issue as "sensitive" the Saudi Foreign minister, Saud Al-Fasal, an influential member of the moderate group, cautioned against any hasty decision that would jeopardise the interest of member nations. He also warned of the consequences of including the issue as part of the communiqué.

He said such declaration at the summit could further weaken the US dollar and also hurt the interest of OPEC, "the very announcement to put this case for study would make the dollar to descend even further. It would add to the problems our countries."

According to him, it is a technical issue, besides oil, those countries that are not OPEC members produce the bulk of the world’s oil. As at this moment OPEC represents 40 per cent of the oil output. The other producing nations, he said, must also have a role as regarding the currency they are dealing with.

At the end of the closed door meeting the opinion of the Saudi minister prevailed as he suggested that an independent body should be set up to look into the issue of changing monetary policy in respect of oil. He urged the members to stick to points that would be discussed at the final agenda of the summit. And these are the issue of providing petroleum, promoting prosperity and protecting the planets.

Saudi Arabia set the ball rolling when it announced that it was contributing $300million towards the establishing an international fund on scientific research into energy, the environment and climatic change, another member Qatar also made available $150millions and Kuwait $150 millions.

Calling on other nations to emulate the Saudi initiative, King Abdullah to jointly protect the environment and the plant.

He stated that oil is fundamentally meant to be used for progress of international community and there should be used as an instrument of energy for construction and not as tool for instigate conflicts or satisfying one’s whims.

Responding to those that describe OPEC as an organisation that takes advantage of opportunities, he said their actions were a mix of truth and falsehood . " OPEC he noted has always acted with modesty and wisdom, the best example of which is the current price of oil that, in spite of spiralling inflation, is the same as it was in 1980s in real term".

Nigeria expressed the need to sustain demand for oil as part of the way to ensure the provision of petroleum products to the world. Nigeria’s minister of state for petroleum , Odein Ajumogobia recalled that high prices of crude oil in the past had led to recessionary tendencies, which depressed demand and then the prices crashed.

According to him, Nigeria has a significant concern over the effect of near $100 crude oil prices on demand. Analysts said with this kind of thinking they would be surprised if Nigeria decides to toe the line of hardliners like Iran and Venezuela.

Among the factors that are affecting prices are the weakening US dollar , geopolitical tensions and refinery problems.

They said that any crash in the price of oil would adversely affect its development plans. The country depends on oil export to oil its economy.

The minister stated that high prices would encourage conservation measures and investment in alternative energy sources, which will reduce demand for crude. The situation, he noted , could slow down the economies of consuming nations by increasing cost for companies and reducing consumers’ spending. He disclosed at the meeting that the country plans to increase the production out put four million barrels per day by 2010 despite the Niger Delta crisis. The country output last year was about 2.1 million because of the crisis which shut in about 600,000 barrels per day.

About $15 billion would be required by the country to be invested by both government and third party investors on yearly basis for the next five years to meet this production target.

The OPEC Fund for International Development, OFID was also not left out of the politics as it tried to highlight it activities to the world.. It director general Suleiman Jassir Al –Harbish said the OFID has granted financial assistance to over 1,000 developmental projects under way in poor and developing countries. "Since OFID’s establishment in 1976, 80 percent of its loans have gone to low-income countries". A breakdown of the beneficiaries of continents indicates that 50 countries in Africa , 40 in Asia , 27 in Latin America and the Caribbean and four in Europe .

Around 650 projects are based in Africa , mainly for developmental in sub-Saharan states, where the per capita income is $100 per year or roughly 27 cents per day.

OFID’s current reserves amount to $6 billion. ‘OFID took a decision to offer $500, 000 to Bangladesh flood victims, as part of humanitarian emergency relief.. Similarly, OFID aid has also been extended to the people in Palestine and Lebanon .

OFID also funds health programmes in poor countries, particularly for combating diseases such as HIV and AIDS. Additionally, it is building clean water facilities and roads in African countries.