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A senior Iranian oil official said on Sunday high oil prices might remain till the end of the year and were not the result of a shortage of crude in the market.

Crude prices hit a record near $120 a barrel last month, although they have since slipped back a few dollars. Iran and other OPEC states have repeatedly blamed factors like the weak U.S. dollar and speculation, not supply issues, for the rise.

“The fluctuations have an upward tendency now and the possibility of seeing very high oil prices by the end of the year is not unlikely,” Hojjatollah Ghanimifard, international affairs director of the National Iranian Oil Company, said.
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The president of Opec has warned that the price of oil could hit $200 (?100) a barrel, spelling more pain for the major crude-consuming economies.

Chakib Khelil said there was nothing that the oil producers’ cartel could do to bring down the high price, which he blamed on geopolitical tensions and market speculators.

His comments, coming as oil touched a record $120 a barrel on Nymex at one stage yesterday, are seen as rejecting pleas from America and Europe for Opec to turn on the taps and help rein in the price. Mr Khelil, Algeria’s energy minister, said there is no evidence of a shortage of oil on world markets.
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US light, sweet crude rose more than $3 to $109.48 a barrel at one point, but then tracked back slightly. This came after a gain of $2.40 on Friday.

The rises were helped as producer group Opec reiterated that it saw no need to increase output.

Investors have also been looking to move out of the weak dollar and into commodities, pushing up the oil price.

London Brent crude also rose, up $2.24 to settle at $107.14 a barrel.

“Oil supply to the market is enough and high oil prices are not due to a shortage of crude but rather it is because of the decrease in the dollar’s value, shortage of refinery capacity and some political tensions in the world,” Opec secretary general Abdullah al-Badri said.

Commodities are viewed as an attractive alternative investment to dollars.
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ALGIERS, March 16 (Reuters) - Oil markets are rising due to speculation and the U.S. dollar’s fall, not to a lack of petroleum production, OPEC President Chakib Khelil said on Sunday, the official Algerian news agency APS reported.

APS quoted Khelil, who is also Algerian Energy and Mines minister, as saying: “Prices are not going up because of a lack of output, but rather from the effect of speculation.”

This increase in price “is linked not to a lack of production but to the devaluation of the dollar which has given speculators the opportunity to invest in oil.”

The Organization of the Petroleum Exporting Countries (OPEC) left its output steady at a meeting earlier this month despite calls from consuming countries for more oil to halt the record rally. The price hit a peak of $111 a barrel on Thursday.

Crude futures have jumped about 15 percent this year in part due to a steep decline in the U.S. dollar, which has helped push up the nominal value of all commodities prices in the currency.

Khelil said investors were shifting into oil and gold because “there is no longer the possibility of good profitability in stock markets which have lost a lot of their value.”

APS reported Khelil as saying OPEC had played no role in oil’s rise, adding that its move to keep levels unchanged had been approved “taking into account the situation of the market, which is well supplied with stocks of crude, which are more than sufficient in relation to the average of the past five years.”

“How can some people say that OPEC contributes to the current price spike and at the same time issue forecasts saying that world oil demand will reduce in the second quarter because of the economic crisis?” he added. (Reporting by William Maclean, editing by Maureen Bavdek)

Source: Reuters