oil - OPEC

OPEC head sees oil hitting $150-$170 this summer

Saturday 28 June 2008

OPEC President Chakib Khelil says he expects oil prices to rise to $150-170 over the summer, but not to hit the $200 mark. He cited the continued weakness of the US dollar and international pressure on Iran.

The president of the Organization of Petroleum Exporting Countries (OPEC), Chakib Khelil, said he expects oil prices to reach between 150 and 170 dollars per barrel this summer.  

“I predict prices will probably hit 150 to 170 dollars this summer,” he said in an interview with FRANCE 24’s Ulysse Gosset and Raphaël Kahane, adding: “Prices will maybe fall towards the end of this year.” He said he did not expect oil to hit the $200 mark over the summer.

The OPEC president cited two main underlying reasons for the rise in oil prices – economic and geopolitical. Khelil believes that if the European Central Bank raises interest rates over the summer, that would further weaken the US dollar against the euro and thus push the price of oil up (oil is priced in US dollars). He also cited increased demand in the summer months, especially in the US. Additionally, Khelil said international pressure on Iran could also be a factor. “There are also the threats against Iran. If they intensify, I think the price of oil will rise this summer.”

Khelil, Algeria’s energy minister since 1999, insisted that there was no current need for OPEC to increase its oil production. “OPEC’s statute asks the organisation to satisfy the needs of the international oil market. We have always done that… now, it’s very difficult to find a market… I put my oil on the market, but I don’t find any buyers.”

However, Khelil acquiesced that OPEC’s position may change during its next meeting in September. “We will reevaluate the situation according to the demand”, he said.

Khelil also warned that if ever a global crisis led Iran’s oil production to cease, OPEC would not be able to cope because its members could not replace the lost production. In this hypothetical case, “prices could rise up to 200, 300, 400 dollars per barrel,” he said.