OPEC chief predicts further oil price rises

Oil prices could soar as high as US$170 a barrel over the next few months, the president of oil cartel Opec warned today.

Chakib Khelil, president of the group of oil producing nations, forecast that the cost of crude would rise to between USD$150 and USD$170 dollars a barrel this summer.

Algerian energy minister Mr Khelil said in an interview with French television channel France 24 he hoped the oil price spike would ease back later in the year and dismissed market fears of a surge above USD$200s a barrel.

But he cautioned that a major market crisis, such as production stopping in Iran, could see prices rise to USD$200 or more.

Opec’s grim forecast for summer oil prices comes as calls mount for the group to increase oil production and help reduce soaring fuel inflation.

British prime minister Gordon Brown is among a raft of western leaders to have put pressure on Opec as inflation rockets on the back of higher oil and energy bills.

Light, sweet crude for August delivery hit USD$135.10 a barrel in electronic trading on the New York Mercantile Exchange.

The AA revealed yesterday that average diesel prices hit £6 (€7.60) a gallon for the first time at an average 132.03p per litre – 35% dearer than a year ago.

Average unleaded petrol prices also hit a record of 118.65p per litre yesterday, or £5.39 (€6.80) a gallon, the AA said.

Filling up a tank with 50 litres now costs an extra £10.86 (€13.71) for petrol and £17.38 (€21.94) for diesel compared to a year ago, the figures showed.

Oil hit an all time high of USD$139.89 last week, with prices up 40% since the start of this year alone largely as a result of concerns over global supplies.

But buying from speculative traders keen to protect themselves from a falling dollar is also thought to be behind the spike.

Bank of England governor Mervyn King told MPs today that in “real” terms, when inflation is stripped out, oil prices are now as high as they were in the 1970s.

He also warned that a further rise in oil prices posed the biggest threat to efforts to bring runaway inflation under control.