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OPEC SUMMIT Oil could hit 200 usd if US targets Iran, Venezuela - Chavez UPDATE

d.sheppard@thomson.com, jan.harvey@thomson.com

RIYADH (Thomson Financial) - Venezuelan President Hugo Chavez tonight kicked off the Third OPEC Summit with a stark warning about the price of oil in times of conflict.

In his opening address to leaders and delegates of the powerful 13-member group, Chavez ominously warned that oil -- currently camped out just below 100 usd a barrel -- could hit 200 usd if the US continues with its aggressive stance against either Iran or Venezuela.

"If the United States was mad enough to attack Iran or threaten Venezuela again the price of a barrel of oil could reach 150 usd or even 200 usd," Chavez said, describing 100 usd as a "just" and "fair" price.

Referring to the US, Chavez also suggested OPEC should "ask the most powerful nation in the world to stop threatening OPEC". Oil was the basis of all aggression, he said, referring to the war in Iraq and US threats against Iran.

Chavez also called for OPEC to take on a more political role in the world, in order to safeguard member states' security and economic interests.

Chavez's stern words follow a pre-summit OPEC ministerial meeting that saw Venezuela and Iran yesterday take a tilt at the weak US dollar -- it has fallen 15 pct in the past 12 months -- and call for OPEC to address the issue in its end-of-summit declaration.

They called on OPEC, which produces about 40 pct of the world's oil, to formally state their concerns over the soft dollar, a possible step towards pricing oil in different currencies.

Other members -- who also voiced concern about the the currency's slide -- saw such a move as too risky given the current nervous economic climate and voted overwhelmingly -- sources put the vote at 10-2 -- against it.

OPEC Secretary General Abdallah salam el-Badri said of dollar weakness after Friday's closed-door meeting: "It is our concern, but it will not be in the final (summit) declaration."

He added: "We discussed it in the Members' Secretariat but it is (individual) member country policy."

Sources are now saying the differing views within OPEC about the dollar will likely be sorted out via diplomatic channels over coming months. OPEC is largely dominated by pro-Western Gulf states.

Speaking shortly after Chavez tonight, Saudi Arabia's King Abdullah took a more moderate approach.

"Oil is an energy for construction and must not become an instrument for conflict," King Abdullah said, arguing OPEC had always been a fair organisation.

"If we were to factor in fluctuation and inflation it would not have reached its actual price of the 1980s," King Abdullah said of current oil prices.

The King also said Saudi Arabia is to put aside 300 mln usd to fund research into climate change research.

Meanwhile, Chavez tonight added that "OPEC must change and become a much stronger player in the geopolitical and geo-economic domains".

"In the years ahead OPEC should set itself up as an active political agent," he said, adding that "we need to know the world powers do not expect us to guarantee regular supply and stability of prices without anything in return".


Copyright Thomson Financial News Limited 2007. All rights reserved.
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