EU says switch oil from dollar to currency basket

Discussion in 'Commodity Futures' started by ForexIam, May 27, 2004.

  1. ForexIam


    UPDATE - EU says switch oil from dollar to currency basket
    Wednesday May 26, 6:03 am ET
    BRUSSELS, May 26 (Reuters) - World oil trade should be switched to a basket of currencies, including the euro, rather than be priced in dollars only, the European Commission said on Wednesday.
    "If the oil price should be related to a value it should be a consequence of a basket of currencies involving the main oil consumption (nations)," Energy Commissioner Loyola de Palacio told reporters after a news conference.

    "This should give the real picture of the impact of the oil prices."

    A spokesman for Palacio said a currency basket for oil trade, all now dollar-denominated, would help provide stability on world oil markets.

    Palacio told the news conference that speculation, not a real shortage on oil on the market, was fuelling high prices. She called on OPEC (News - Websites) to increase its output, saying the oil producers' credibility was at stake.

    "What we have here is a speculative bubble... There is no real shortage on the markets. That is the reality," Palacio said.

    She also said European Union (News - Websites) member states had enough oil reserves to cope with more than the mandatory requirement of 90 days of demand.

    "Our impression is that...they have additional capacity stored in addition to what is required under current legislation, the 90 days," Palacio said.

    "In principle there are sufficient stocks."