On Monday (18 December) the dollar fell on the world's money markets in the wake of the unexpectedly high rise in crude oil prices announced at the weekend by members of the Organisation of Petroleum Exporting countries (OPEC).
GV newsmen gathered around Sheikh Yamani with OPEC (Organisation of Petrolleum Exporting Countries) Ministers sitting at tables
SV ZOOM INTO CU as Sheikh Yamani answers newsmen in English (TWO SHOTS)
TRANSCRIPT: SEQ. 2: YAMANI: "If you look at if from the point of view of the producers, their purchasing power deteriorated to a very low level because of the value of the dollar and because of inflation. Ten percent increase in their revenue is only a partial compensation for the losses they incurred. But if you look at it from the overall picture, I tried my best to make it a little bit lower, but the market today is in a unique situation, especially with the Iranian crisis. The price of our master crude went up by more than what we bid to date. And in the market a barrel of crude is sold at a higher price than what we have for instance in January or even mid-79. So the market is already ahead of us. We think that the world economy will be able to absorb this, especially for those nations who are buying the crude at a much lower price than what they used to do in 1977, mainly the Japanese, the Germans and so many other nations."
Sheikh Yamani predicted that there would be a slight decline in the dollar in 1979 even without the OPEC oil price rise. He said that he hoped the dollar would not fall too much below what it was on Monday but said that the dollar should recover by the end of next year as a result of President Carter's stabilisation measures. However, none of these statements have stilled fears that the oil price increase would boost the upward spiral of inflation that has be-devilled the western world since the five-fold increase which followed the 1973 Middle East War.
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Background: On Monday (18 December) the dollar fell on the world's money markets in the wake of the unexpectedly high rise in crude oil prices announced at the weekend by members of the Organisation of Petroleum Exporting countries (OPEC). The price will go up by 14.5 percent in stages over the next 12 months. In an effort to offset currency fluctuations, OPEC announced that the price rise would be instituted in stages. OPEC warned also that if the currency turmoil continued, the 13 member countries would find it imperative to adjust fully for the effects of inflation and dollar depreciation.
SYNOPSIS: The Saudi Arabian Oil Minister Sheikh Ahmed Zaki Yamani defended the price rise.