LONDON (Reuters) - Oil producers would be increasingly comfortable with crude prices of $100 a barrel, because higher food prices and a weaker dollar are eroding their income, the top oil official for OPEC member Libya said on Tuesday.
The comments add to indications the Organization of the Petroleum Exporting Countries is unlikely to step in soon to quell rallying prices. Saudi Arabia on Monday also shifted upwards from a price range of $70-$80 it has backed for around two years.
“Now the price will be more comfortable for the producers if it is around $100,” Shokri Ghanem, chairman of Libya’s National Oil Corporation, told Reuters. “The dollar is down and the prices of the other commodities are up.”
Oil rose after Ghanem’s comments to trade above $84, higher than the $70-$80 range many in OPEC had been saying was high enough to give producers a decent income without hurting the world economy.
The 12 OPEC members rely on revenues from oil, priced in dollars, to pay for imports.
Oil prices could move towards $100 by the end of 2010, said Ghanem, the head of Libya’s OPEC delegation.
“I think that we can get closer to $100. There is a sort of tacit compensation for the increase in the prices of the other commodities. The price is inching up, and I think it will be closer to $100.”
Dollar-denominated commodities have risen as the dollar has come under pressure on expectations that the U.S. Federal Reserve will opt for a new round of quantitative easing at a meeting on Tuesday and Wednesday.
In addition, wheat prices have increased because of a Russian drought and export ban.
“The other commodities prices, food prices, went up so much. “And so the terms of trade for the producing countries is against them,” Ghanem said.
The oil minister for Saudi Arabia, the world’s largest exporter, on Monday said oil at between $70 and $90 a barrel was comfortable for consumers.
Until now, Saudi Oil Minister Ali al-Naimi had said the ideal range for producers and consumers was $70-$80, either side of the $75 identified by the kingdom in November 2008.