Opec urged to switch to basket in pricing oil

Opec needs to quit the US dollar in favour of a basket of currencies in pricing its crude oil to avert persistent fluctuations in its income due to volatility of the greenback, according to a UAE think-tank. The Emirates Centre for Strategic Studies and Research (ECSSR) yesterday said the 12-nation oil group had continuously suffered from low real revenues over the past decades because of violent fluctuations in the US currency. ECSSR said Opec's Gulf members are expected to be the main victims this year of the sharp decline in oil prices given their heavy reliance on oil sales, renowned writer Ahmed Al Nejjar said. "In addition to the issues of oil prices and influence over the international oil market, Opec continues to overlook the issue of trading oil in dollars and the necessity of switching to a basket of major international currencies, which of course includes the dollar," the study said. "This is a subject that should be open to discussion, and the fear of change and impractical political reservations on the issue should be abandoned as there is no rationale in pricing oil in one currency for it causes fluctuations in the international purchasing power of oil exporting countries and links them to the state of the US economy, with all the concomitant volatility in the value of the dollar against other major currencies." The study said the collapse of oil prices by nearly $100 a barrel over the past few months would hit the fiscal balances of the Gulf Co-operation Council this year after recording massive surpluses over the past seven years. Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here .