Report claims oil states plotting to end dollar trade

A report published Tuesday by an esteemed British journalist alleging that oil states and China are teaming up to replace the dollar as the currency of choice in trading oil received ardent denials from several of the countries allegedly involved.

Writing in The Independent, reporter Robert Fisk alleged that Gulf states -- along with China, Russia, Japan and France – are eyeing an end to dollar dealings for oil, "moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar."

"Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars," Fisk added. "The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years."

Fisk's story received swift and vehement denials from some of the countries purportedly involved.

Asked by reporters about the newspaper story, Saudi Arabia's central bank chief Muhammad al-Jasser said: "Absolutely incorrect." He repeated the same response when asked whether Saudi Arabia was in such talks.

Kuwait's oil minister and a well-placed source in the Organization of the Petroleum Exporting Countries made similar remarks. Russia's deputy finance minister Dmitry Pankin said: "We did not discuss this at all."

The dollar slipped in the wake of the newspaper story. The euro edged up as high as $1.4749, although it fell back to $1.4701 when the Saudi Arabian and Russian officials denied the report.

Algerian Finance Minister Karim Djoudi told Reuters: "Oil producing countries need to stabilize revenues but...I don't see a need for oil trade to be denominated differently.

"But we are at the IMF conference where all sorts of subjects are raised and discussed," he added.

Analysts say changing the currency in which oil is traded would require massive efforts by producer countries.