The price of oil will continue to climb, especially if there is no improvement in the outlook for the dollar, OPEC president Chakib Khelil told Spain’s national radio Monday.
“We are going to witness a price rise,” especially if the economic situation in the United States persists and the dollar continues to decline, he said. The US economy has been buffeted by a lingering housing market slump, a related credit crunch, increased job cuts and record high crude oil prices. Khelil blamed the soaring price of oil on speculators, geopolitical problems and the weakness of the dollar, all “factors beyond the control” of OPEC. “If OPEC decides to raise production ... these hikes will not really lower the price,” said Khelil, who is also the Algerian energy minister.
A falling dollar makes commodities such as oil cheaper for those with stronger currencies and so in part encourages demand. Oil rose above $133 yesterday due to lingering supply concerns from key oil producer Nigeria and a partial shut-in at the North Sea oilfields. London Brent crude rose $1.46 to $133.03 a barrel by 1036 GMT, marking a larger gain than US crude.
US crude rose $1.10 cents to $133.29. Last week, it struck a record high of $135.09. Nigeria’s army confirmed on Monday there had been an explosion at an oil facility owned by Royal Dutch Shell, hours after Niger Delta rebels claimed to have blown up a pipeline. Impact on output from the most recent blast was not immediately clear. “Nigeria continues to experience supply problems,” Robert Laughlin with MF Global said in a research note. Oil output in Nigeria, an OPEC member and Africa’s top producer, has been erratic in recent months due to repeated rebel attacks to oil facilities and a workers’ strike in April.
In Europe, Norwegian oil and gas producer StatoilHydro said Statfjord A in the North Sea, which produces 19,000 barrels of oil per day, remains shut after an oil leak on Saturday. The leak halted output of about 138,000 barrels per day at Statfjord and the two linked fields. Output at the two fields has since been restored. Longer-term worries that supply will struggle to keep up with demand over the next few years also continue to support prices.
Another OPEC member, the United Arab Emirates, said on Sunday it was ready to boost oil output if necessary. “We are always happy to put more oil in the market if the market needs more,” UAE Oil Minister Mohammed Al-Hamli said when asked if UAE would raise supply with the Saudis. (Peninsula, Qatar)