MOTORISTS AND consumers are facing further steep increases in the price of petrol and home-heating oil after the head of Opec, the cartel that produces more than 40 per cent of the world's oil, warned that the price of oil will climb to $170 a barrel before the end of the year.
With oil relentlessly on the rise since breaching a symbolic high of $100 per barrel in early January and after a new record of $142.99 was reached last Friday, Opec president Chakib Khelil reiterated the prediction that significantly higher price levels will be seen within months because of the weakness of the US dollar and political pressure on Iran.
"Oil prices are expected to reach $170 as demand for fuel is growing in the US during the summer period and the dollar continues to weaken against the euro," said Mr Khelil, who is oil minister of Algeria.
His remarks came ahead of a likely quarter-point increase in euro zone interest rates next Thursday. As well as increasing the cost of mortgages in the declining domestic economy, the likely move by the European Central Bank will further weaken the US currency and put yet more upward pressure on oil prices.
"The decisions made by the US Federal Reserve and the European Central Bank helped the devaluation of the dollar, which pushed up oil prices," Mr Khelil said.
Opec ministers say oil output is sufficient, even as Saudi Arabia, the biggest producer, pledged to pump an extra 200,000 barrels a day next month to calm the market. "There is more than enough oil in the market to meet the international demand," said Mr Khelil.
Fellow Opec member Qatar said yesterday it would not follow Saudi Arabia's lead in increasing crude oil production because supplies are adequate. This follows the United Arab Emirates and Kuwait, which also declined to increase output at a time when record prices are fuelling global inflation and slowing growth.
A survey of 2,570 respondents in Britain for ITV said rising petrol prices are forcing one in five people (19.2 per cent) to cut back on food. Over one-quarter, 26.7 per cent, are reducing the amount they spend on leisure activities, while 15.1 per cent have cancelled outings or holidays outright and half - 49.9 per cent - are using their car less frequently.
In Switzerland, central bankers at the annual meeting of the Bank for International Settlements said rising energy costs risk damaging growth in rich and poor countries. Officials from over 100 central banks exchanged views on the global outlook, agreeing that oil prices were a major concern. - ( Bloomberg, PA, Reuters)