Array

Kuala Lumpur, June 12: The Organization of the Petroleum Exporting Countries (OPEC) on Monday reiterated its concern that the volatile U.S. dollar and rising inflation rates may restrain global oil demand growth.

''We are concerned with the inflationary pressures and the prospect of high interest rates as a monetary tool to contain inflation,'' Mohammed Barkindo, the cartel's acting secretary general, told Reuters in Kuala Lumpur.

''We are (also) concerned with the instability of the dollar, and the cumulative effect of these may impact demand,'' he said on the sidelines of the Asia Oil&Gas Conference (AOGC).

OPEC President Edmund Daukoru, also Nigeria's top oil official, said a week ago that tightening fiscal policies could curb oil demand growth, potentially undermining a key pillar helping support oil prices above $70 a barrel.

Soaring commodities prices have fired up inflation, forcing central banks to raise interest rates but sparking fears that higher borrowing costs will hurt economic growth.

The U.S. dollar's tumble this year, hitting a one-year low of nearly $1.30 to the euro one week ago, has also emboldened producers to hold out for higher oil prices to offset their reduced purchasing power in other currencies.

The dollar has since rebounded to a near one-month high versus the euro on expectations that the U.S. Federal Reserve will raise interest rates for a 17th time later this month.

Reuters