Iran expects crude at new record

Tehran: Iran's governor at the Organisation of Petroleum Exporting Countries (Opec) said yesterday he expected the oil price to hit more records due to increased transportation during the summer, the state broadcaster reported.

"With the onset of summer and increased transportation, the record oil price will be broken again," Mohammad Ali Khatibi was quoted as saying.

Oil fell more than $1 to near $126 early yesterday as the US dollar edged up and traders shrugged off Tropical Storm Arthur, which marked the start of the Atlantic hurricane season by shutting two Mexican oil ports.

Oil hit an all-time high of $135.09 a barrel on May 22, driven by rising flows of cash from investors and concerns supplies will struggle to match demand longer term.

But a series of fuel price hikes across Asia and protests in Europe last week shifted focus to the potential for weakening consumption.

Khatibi, appointed as Iran's Opec governor last month, also said psychological factors were behind the high oil price.

"The factors behind the breaking of the oil price record are not supply and demand, but rather psychological factors existing in the market," he said.

He said on May 22 there was no need for Opec to raise oil output as supply was already above demand.

Iran, the world's fourth-largest oil exporter, has frequently said the market is not short of crude supply. It has blamed the high oil price on other factors, including a weak US dollar.

Consuming countries such as the United States have pushed Opec to raise output to help tame prices. Opec officials maintain prices are beyond their control.