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Oil's rise is mainly dollar's devaluation, OPEC chief says

Section: Daily Dispatches

OPEC Chief Sees Oil Going to $150-$170

From Reuters
Thursday, June 26, 2008

PARIS -- Crude oil prices could rise to as high as $170 per barrel in the coming months but are unlikely to hit $200 and should ease towards the end of the year, OPEC President Chakib Khelil said in an interview on Thursday.

"I forecast prices probably between $150-170 during this summer. That will perhaps ease towards the end of the year," he told France 24 television, according to a text of the interview released by the station.

The comments came as crude prices neared $135 per barrel, after rising about 40 percent this year.

Khelil said he doubted prices would climb as high as $200.

"I think that the devaluation of the dollar against the euro, if everything goes as I think it will, will be of the order of perhaps 1-2 percent and this will probably generate an $8 rise in the price of oil," he said.

The head of the Organisation of Petroleum Exporting Countries, said it had been clearly established that speculation was impacting markets.

"It's not a question, but a certainty. The problem is the extent of that speculation on the market," he said, adding that the effect of the subprime crisis in the United States had affected oil markets.

Asked what the main factor behind the rise in prices had been, he replied: "I think it's the devaluation of the dollar."

"You can see, every time the dollar strengthens, there is a fall in prices," he said.

Khelil reiterated that OPEC, which represents 13 oil producing countries in Asia, Africa and the Middle East and South America, tried to meet the demands of the market, as its statutes required.

"It's very difficult now to find a market. If you tell me there is someone to whom we haven't sold oil and who needs it, I'd see, but right now I put my oil on the market and I don't find buyers," Khelil, who is also Algeria's energy minister said.

Asked whether OPEC could change its stance against increasing supply at its next meeting on September 9, he said: "Yes, of course, we will review the situation of the market, based on demand. If there is real demand on the market, OPEC will take the necessary measures to satisfy that demand."

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