Page last updated at 21:38 GMT, Wednesday, 2 July 2008 22:38 UK

Opec head sees new oil price rise

Dr Chakib Khelil blames the fall in the value of the dollar for record highs

The president of the oil producers' group, Opec, has warned that crude prices could rise further this week if eurozone interest rates go up.

Dr Chakib Khelil told the BBC that he expected a rise in rates to lead to a further weakening of the dollar which would push oil prices higher.

Dr Khelil blamed the fall in the value of the dollar for recent record highs.

He also rejected calls to increase the supply of oil, saying a boost by Saudi Arabia had failed to temper prices.

"What happened was that instead of coming down, they increased, because the perception of the market is that the dollar will continue weakening in future," Dr Khelil told the BBC's World Business Report at the Petroleum Congress in Madrid.

The price of oil hit another record high during the day with US light, sweet crude peaking at $144.32 a barrel in New York before closing at $143.57.

In London, Brent crude futures rose $3.59 to settle at $144.26.

The rises came after the US government reported a bigger-than-expected fall in its stockpiles of crude oil.

Long-term prices

The European Central Bank has hinted that it may increase its main interest rate from 4% in an effort to control accelerating consumer price inflation.

However, it has not made any firm commitment to lifting borrowing costs at its rate setting meeting on Thursday. A decision will be announced at 1345 local time (1145 GMT).

Some analysts have predicted that the bank may lift interest rates by a quarter of a percentage point to 4.25%.

Looking further ahead, Dr Khelil said refining capacity would be one of the main factors determining long-term oil prices.

"We know that there is enough oil to supply the world for the next 50 years," he said.

"What we are not sure about is whether we are going to do the required investment quickly enough to bring up the production that is demanded in the future."




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