Dollar causes record oil prices: Iran

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Oil hovers below $79 after 3-day slideOil spikes to USD 81.26 a barrelOil eases to USD 78.65 a barrelOil tops $80, highest since Oct 14, 2008

Tehran, May 10:: The weak US dollar is the main reason behind oil prices rising to record levels, not demand or supply factors, an Iranian Oil Ministry official was quoted as saying on Saturday.

"We must be aware that it is not the price of crude oil that has risen but the dollar value that has weakened," said Mohammad Ali Khatibi, Deputy Director of International Affairs at the National Iranian Oil Company.

"Currently the prices of crude oil do not follow supply and demand and they will gain moderation in the event of improvement in (the value of) the dollar," he was quoted as saying by the Oil Ministry website Shana.

Khatibi was speaking a day after US crude oil futures jumped to a record above $126 a barrel, extending gains to more than 11 percent since the start of the month on fuel supply concerns and a rush of speculator buying.

The steady rise in crude oil prices has turned the spotlight on the Organization of the Petroleum Exporting Countries (OPEC), which for months has insisted it has no control over the factors it blames for pushing up the price of oil, including speculation and the weak US dollar.

Iran is the world's fourth-largest oil producer and OPEC's second largest exporter.

"I believe there is a direct relationship between the drop in the value of the dollar and hike in the price of oil," Khatibi said, adding oil prices rose eight percent in the first quarter of 2008 after the dollar fell as much the previous quarter.

On Thursday, Iran's Oil Minister Gholamhossein Nozari said it would be possible to see a price of $200 per barrel for crude if existing conditions in the market continued.