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New York: Dmitry Medvedev, the president of Russia, the world's second-biggest oil producer, expects prices to rise to $150 a barrel and retard global growth.
"Oil prices will reach $150 a barrel," Medvedev said in a meeting with reporters in Moscow ahead of his participation in a summit of the Group of Eight (G8) industrial countries in Japan on July 7-9. "Unfortunately, rising oil prices create problems for the world's economy."
Russia is in its 10th year of economic growth, boosted by record oil prices that have doubled in the past year to record highs. Gross domestic product expanded by 8.5 per cent in the first quarter, the second fastest pace since 2000.
"It's odd for any politician to be talking the market up, but they are a big exporter so it's in his interest," said Tony Regan, an energy consultant with Nexant Inc in Singapore. "It's also saying that 'you can't take me for granted'. The G8 meeting will have a lot of leaders interested in bringing the oil price down but he won't necessarily agree with that."
Oil prices have climbed on concerns that future supplies will be unable to meet demand from emerging economies such as China and India. Crude has also gained as the US dollar declines and investors buy commodities to hedge inflation.
Crude oil futures for August delivery in New York rose to a high of $145.85 a barrel. It was trading $1.68 higher at $145.22 by 1131 GMT. London Brent crude hit an even higher peak of $146.69. It was trading $1.82 higher at $146.08.
Medvedev said oil prices will likely stay high.
"This is a reality that everyone has to take into account," he said, according to the transcript of the July 1 meeting with reporters released by the Kremlin on July 3.
The Russian president called the influence of the Organisation of Petroleum Exporting Countries as "exaggerated", saying the organisation's decisions don't always have a "long-term impact on oil prices".
He called for talks among oil producers, consumers and those countries that transport oil to markets through pipelines.
Russian oil production declined in June, bringing the nation closer to its first annual drop since 1998. Output fell to 9.77 million barrels a day (or 40 million metric tons a month), one per cent less than June last year, according to data released by CDU TEK, the dispatch centre for the Energy Ministry.
Medvedev said Russia should diversify its economy away from oil. Meanwhile, Medvedev also plans to lock up rights to ship natural gas from three Caspian Sea nations that control 3.3 per cent of the world's reserves as competition for the fuel from Europe and the US increases.
Medvedev, who took over from Vladimir Putin two months ago, is travelling to Azerbaijan, Turkmenistan and Kazakhstan to review supplies as contracts come up for renewal and Azerbaijan steps up output from its offshore field.
Lifeline
Russia, the world's largest gas producer, provides 39 per cent of Europe's pipeline gas supplies, using its dominance to assert a leading role for Russia in determining Europe's security. The European Union wants a pipeline from the region through Turkey, called Nabucco, that would bypass Russia while Gazprom pursues a system that would connect Russia directly to the EU. Both are competing for the same Caspian gas to fill them.
"It's Putin's plan that all the gas from this part of the world should be sold by Gazprom," Mikhail Korchemkin, director of the East European Gas Analysis consulting firm in Malvern, Pennsylvania, said by telephone.
Medvedev is looking for exclusive arrangements to fill the South Stream project as production falls at Russia's biggest fields. Russian natural gas production fell 0.8 per cent to 607.4 billion cubic metres last year, and accounted for 20.6 per cent of world output.
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