OPEC: Oil at $100 not necessarily very high

The price of $100 for a barrel of crude oil is "not necessarily very high" given the high demand of oil and higher production costs, the president of Organisation of the Petroleum Exporting Countries said on Sunday.

On Wednesday the price of a barrel of crude reached $100.09 (67.85 euros) in New York, before retreating at the close to $99.18.

Algeria's Energy Minister Chakib Khelil - who took over the rotating presidency of Organisation of the Petroleum Exporting Countries on January 1 - said that the current surge must be seen "in relation to the real price", that is taking into account inflation.

The current oil price was therefore below its 1980 record of "between $102 and $110 depending on estimates", he said.

Khelil said that high oil demand was being pushed by "China and India but also by the Middle East whose consumption has risen immensely"."When you take that into account, $100 is not necessarily very high," he said.

Khelil said on Saturday, "The surge in price will probably go on until the end of the first quarter of 2008, before stabilising during the second quarter."

Speaking on the sidelines of a conference on the security of hydrocarbon pipelines in the Algerian capital, Khelil said a second quarter stabilisation was "probable."

Market plays key role
Meanwhile, Saudi Oil Minister Ali Al Naimi said that the rise in oil prices to a record high had been determined by market forces.

"The market fixes the price of oil," Naimi said at an energy conference in Riyadh when asked to comment on oil's surge to a record above $100 last week.

Al Naimi declined further comment on the price or what the Organisation of the Petroleum Exporting Countries would decide at its next meeting on February 1 in Vienna. Saudi Arabia is the world's largest oil exporter and the most influential voice in Organisation of the Petroleum Exporting Countries .

High energy costs have caused concern among some members of Organisation of the Petroleum Exporting Countries about the potential impact on the global economy. But ministers say there is little they can do to tame the price, which is driven by political tension and speculators and not supply and demand fundamentals.

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