The strain of $100 oil for Gulf states

Pleas from the US for Opec to pump more oil have fallen on the deaf ears of Opec ministers as oil prices stay above $100 a barrel.
But this may be about to change, even if there’s no official shift in Opec policy.

A weak dollar is putting the economies of Opec’s most powerful members, the Arabian Gulf nations, under such pressure they may be ready to sacrifice dollar income for more economic and political stability at home.
Pumping more oil to bring prices down would help strengthen the dollar and eliminate the need for Opec’s Gulf members to sever ties to the US currency.

In fact, $100 oil is turning into a curse as the dollar has slumped about 15% against the euro in the past year as oil prices have doubled.
Saudi Arabia, Opec’s most influential member and owner of the world’s largest reserves, is struggling with the rising cost of imports. Inflation hit a 27-year high of 8.7% last month.
Qatar has the Gulf’s highest inflation rate at 13.7%.

As for the UAE, Opec’s third largest oil producer after Saudi Arabia and Iran, which markets itself as the Gulf’s most liberal economy has had to introduce price caps on 14 basic foods.

Thousands of South Asian workers went on the rampage there last week, complaining about rising costs and low wages made worse by the dollar’s slide against the Indian rupee. The UAE dirham is fixed at 3.67 to the dollar.

The region’s central bankers are under pressure to abandon a dollar peg for their currencies or revalue to ease imported inflation. But most are reluctant to end a policy of fixed rates dating back to the 1970s while oil, which accounts for more than 80% of export earnings, remains priced in dollars.

Gulf Times