12.06 PM Tuesday, 23 April 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:28 05:46 12:20 15:47 18:49 20:07
23 April 2024

Oil spike to last through 2008-Opec

By Agencies


Oil prices will stay at current high levels for the rest of this year due to speculation and geopolitical tensions, Algerian state media on Monday reported Opec President Chakib Khelil as saying.

Prices could retreat in 2009 with a recovery of the US dollar in foreign exchange markets following the election of a new US president, and as fundamentals reassert themselves as major market forces, he was reported as saying by government newspaper El Moudjahid and state news agency APS.

"Just like the current surge in oil markets, the (world economic) crisis, will last until the end of the year," he was quoted as saying by El Moudjahid.

"The oil market will stay above $100 during the current financial year, according to the assessment of Khelil," APS said in a report on his remarks to Algerian reporters on Sunday.

It was not immediately clear which fiscal year APS was referring to.

Khelil, who is also Algerian Energy and Mines Minister, said the factors driving the market at present included "speculation, geopolitical tensions, particularly due to the Iranian nuclear affair and the crisis between Venezuela and ExxonMobil," APS reported.

The world economy could get some help with the arrival of a new US president, and possibly a new economic policy, "and with this new situation it is very probable that the dollar will start to recover and thus permit a readjustment of the (oil) market," El Moudjahid quoted him as saying.

Opec members meeting in Vienna last week decided to hold production flat, insisting markets were well supplied and blaming record prices on factors outside the group's control, including speculators and what Khelil called the "mismanagement" of the US economy.

Speculators have piled into oil and other commodities as a hedge against the weaker dollar and inflation as the US economy slows due to a credit crunch, the mortgage crisis and high energy costs.

Khelil said Opec had left output unchanged because it wanted to assist global economic growth, El Moudjahid and APS reported.

The group made its decision in the knowledge that demand was expected to dip by 1.4 million barrels per day (bpd) in the second quarter of the year and that stocks in consuming countries were at comfortable levels, Khelil said.

"If we had increased our production given all these factors, you wouldn't have been able to miss the impact on prices," he said, suggesting prices would have slid.

"We left our output unchanged so as not to disturb the market further and to help the world economy resume its momentum of growth," El Moudhajid quoted him as saying. (Reuters)