Iran's OPEC governor said Tuesday the weak U.S. dollar is driving oil prices above $80 a barrels and the producer group is unlikely to raise output unless demand picks up before its next meeting in Angola.
"$80 today is equivalent to $45 in 2001," Mohammad Ali Khatibi told Zawya Dow Jones in a telephone interview. "The main reason for the rise is the weak dollar.
Members of the Organization of Petroleum Exporting Countries, that pump almost 40% of the world's oil, are unlikely to raise production in a bid to stem the recent surge in oil prices, he said.
He added that demand for OPEC crude is about 29 million barrels a day compared with production of about 28.9 million barrels and stocks are higher than normal.
"There's no shortage of oil in the market," he said.
Analysts are concerned that rising oil prices could derail the fragile recovery in global economies.
"If we see $100 in the next few months it will be catastrophic," said John Hall, chairman at Energy Quote.
Hall added that if the dollar weakens further in the next few months oil prices could hit $100 a barrel and that oil prices at above $75 for prolonged periods would be dangerous for the recovery.
OPEC ministers are scheduled to meet in Angola in December for their next quota setting meeting.
Crude oil futures rose in Asia Tuesday morning with market sentiment optimistic on strong equities, a weak dollar and possibly stock drawdowns.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at $79.85 a barrel at 0645 GMT, up 24 cents in the Globex electronic session. December futures, more traded in the latest session, were up 24 cents at $80.20 a barrel.
December Brent crude on London's ICE Futures exchange rose 26 cents to $78.03 a barrel and November crude futures briefly climbed above $80 a barrel earlier Tuesday.
According to secondary sources quoted by OPEC in its October monthly report, Iran produced about 3.7 million barrels of crude a day in September making it the second-largest oil producer in OPEC after Saudi Arabia.
Prices are "down to the weak dollar but also there's a lot of enthusiasm for stock markets and hedging, also stocks are high and the overhang will be with us for another year at least because of lack of compliance," said Energy Quote's Hall.