Venezuela wants euros for some fuel exports: source
Venezuela is requiring payment in euros for some fuel exports, an industry source told Reuters on Thursday, a sign the OPEC nation may be easing away from the plummeting dollar.
A trader on Thursday told Reuters he had purchased an oil products cargo under a contract issued recently. “Everyone who has that contract has to pay in euros,” said the source, who asked not to be identified. Anti-US President Hugo Chavez has repeatedly bashed Washington for allowing the dollar to slump to historic lows and urged OPEC nations to consider switching oil pricing to a basket of currencies to improve their purchasing power. The trader said he had seen no evidence of state oil company PDVSA asking for payment of other products in euros.
Crude oil traders said they were still paying for Venezuelan cargoes in dollars, the standard currency for the industry. “They’ve asked for that in the past. Mid-last year, they sent a letter around about that but it never went through,” said one US fuel oil trader. The euro hit an all-time high against the dollar above $1.56 in late trading on Thursday, according to Reuters data. Analysts are increasingly attributing record-high oil prices above $110 a barrel to a steadily weakening dollar, which has plummeted due to the slumping US economy and large interest rate cuts. Rumors have circulated for months, that Venezuela would begin seeking payment in euros. PDVSA earlier this year said it was reducing its exposure to the dollar by cutting its billing time to eight days from the industry standard 30.
Chavez last year promoted the idea of changing oil pricing at an OPEC heads of state meeting in US ally Saudi Arabia, but with the influential hosts objecting the proposal, it gained little traction among other members. Venezuela ally Iran has backed the proposal and last year said, its oil industry had cut all ties to the dollar. Chavez, visiting Tehran that same day, proclaimed that the “empire of the dollar is crashing.” Benchmark crude oil is traded in dollars on the world’s principal energy exchanges, NYMEX and ICE, and traders say there is no sign that OPEC’s pricing change would cause those exchanges to shift. In November, Venezuelan Energy Minister Rafael Ramirez said: “The price of oil is at $100 a barrel. But what dollar are we talking about? It’s a dollar that makes you laugh.” (Reuters)
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