Iraq war 'could push oil to 100 dollars a barrel'

The war in Iraq could push oil prices to a record 100 dollars a barrel, Venezuelan President Hugo Chavez said yesterday.

“This war is a powder keg,” said Chavez, after meeting with Brazil’s President Luiz Inacio Lula da Silva. “It could take the price of a barrel to 100 dollars. I hope it doesn’t.”

High oil prices have been a boon for Venezuela, the world’s fifth-largest oil producer. Brazil is a net importer but nearing self-sufficiency.

Chavez declined to comment on OPEC’s decision to raise output by one million barrels a day. The Organisation of Petroleum Exporting Countries is to increase production to 27 million barrels a day as of November 1.

Earlier, Chavez said Venezuela didn’t plan to raise its own production, now at two million barrels a day. He said world markets were “oversupplied".

Chavez spoke with Silva after a meeting of business leaders in the city, deep in Brazil’s Amazon jungle.

The agenda included bilateral matters and the incorporation of Venezuela as an associate member of Mercosur, the trading bloc comprised of Brazil, Argentina, Paraguay and Uruguay.

Silva congratulated Chavez for his political victory in a recent referendum that could have shortened his presidential term, which runs to 2007.

“Now, no doubts remain about the Venezuelan democratic system,” Silva said. Brazil was a key ally of Chavez, a left-wing populist, as he struggled to quell attempts to remove him from power.

“The worst is behind us,” Chavez said.