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Oil may hit $170 a barrel this summer, Opec chief says

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Date: Thursday 26 Jun 2008

LONDON (ShareCast) - The price of a barrel of crude oil will probably rise to between $150 and $170 this summer, the president of Opec has said.

"I predict probably prices of $150 to $170 this summer,” Chakib Khelil, who is also Algeria’s energy minister, said. “It will probably fall a bit towards the end of the year."

Khelil said that crude was unlikely to reach $200 a barrel, as predicted by some analysts. However, prices could surge way beyond that level in the event of an attack on Iran, he said.

Khelil said threats of strikes against Iran – coinciding with high demand for oil in the US over summer – were among the likely causes for future price rises.

He also cited currency factors, saying that the oil price is likely to rise if the European Central Bank raises interest rates.

Since oil prices are quoted in dollars, any weakening of the US currency against others (which would happen if European interest rates rose) would have the effect of lifting the oil price in dollar terms.

Crude prices jumped more than $3 a barrel today as the price as the dollar fell and Libya threatened to cut off oil supplies because of US intimidation of Opec.

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