Iran says oil price bubble will burst

Tehran: An Iranian oil official warned on Wednesday that a "bubble" in oil prices, created by geopolitical concerns, would burst one day, reiterating that the surge in prices was not because of a lack of supply, local media reported.

"OPEC is not very happy with the existing situation that shows a lack of stability in world oil markets," Javad Yarjani, head of Organisation of Petroleum Exporting Countries (OPEC) affairs at Iran's Oil Ministry, was quoted as saying on the Web site of the state broadcaster.

US crude hit a record high of more than $93 a barrel this week but has since dipped below $90 on recovering Mexican oil output and an expected rise in weekly US crude stocks.

Oil has surged from below $70 in mid-August on a combination of factors, including escalating tension in the Middle East as well as an influx of investor capital.

OPEC President Mohammed Bin Dhaen Al Hamli said on Wednesday the organization would always step in to meet supply shortfalls but said an increase was not on the agenda for OPEC's informal talks in Riyadh in mid-November.

"The bubble of oil price rises ... will burst one day and there is a possibility that oil prices would go down as geopolitical issues ease," Yarjani said.

"The current rise in oil prices in global markets is not because of lack of producers' supply and large demand by consumers but rather it is because of psychological issues
caused by stress and geopolitical concerns in the world."

He also said producers would not welcome prices climbing to $100. Such a price would take oil to its inflation-adjusted high from April 1980, the year after the Iranian revolution.