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LONDON - The chief executive of the world's largest energy company has issued the most dire warning yet about the soaring the price of oil, predicting that it will hit US$250 ($332) per barrel in the foreseeable future.
The forecast from Alexey Miller, the head of the Kremlin-owned gas giant Gazprom, would herald even more expensive petrol and send shockwaves through the economy.
His comments were the most stark to be expressed by an industry executive and come just days after the oil price registered its largest-ever single-day spike, hitting US$139.12 per barrel last week amid fears that the world's faltering supply will be unable to keep up with demand.
Mr Miller's prediction is well beyond even the most heady market forecasts, the most extreme of which fall between US$150 and US$200 per barrel, and was explained only by vague references to demand from the developing world.
It nonetheless stoked an already febrile atmosphere of growing public anger across Europe over a soaring fuel cost that is wreaking havoc at nearly every level of the economy.
The British Government was urging motorists yesterday not to panic-buy petrol in anticipation of a strike on Friday by lorry drivers who deliver petrol to forecourts for Royal Dutch Shell, assuring motorists that contingency plans would ensure sufficient supplies.
In Spain, the regional government of Catalonia enacted an emergency action plan to bring in fresh food and fuel supplies after nearly half its forecourts ran dry and supermarkets shelves were left bare.
The situation was the result of the second day of an "indefinite" nationwide strike staged by lorry drivers in Spain seeking their government's help to contain the effects of expensive petrol.
Scattered protests by drivers and fisherman in France and Portugal also continued yesterday.
In a speech to the European Business Congress in Deauville, France, Mr Miller offered little prospect of relief.
He warned that the world was experiencing a fundamental shift in energy prices that will end at a radically new level.
"We expect that the oil price will approach $US250 per barrel in the foreseeable future."
Philip Shaw, an economist at Investec Securities, warned that oil at the level would exert an extraordinary drag on the economy at a time when it is already decelerating at a rapid rate.
"The word is ouch," he said.
"Forecasts are forecasts though, and I think it should be treated with some level of scepticism."
The most visible result of US$250 oil would be at the petrol pump but the price of everything from food to energy would see significant price spikes.
Household electricity and gas bills are particularly vulnerable.
Mr Miller placed some of the blame on financial speculators for oil's spike - it has more than doubled in the past year - but said that the primary reason is simple supply and demand, driven by the rapidly expanding countries of the developing world, principally China and India.
It is a view shared by the International Energy Agency.
In its monthly oil report, the developed world's energy watchdog said yesterday that the "abnormally high prices [for oil] are largely explained by fundamentals".
But whether the price of oil will reach US$250 is uncertain at best.
Most expect it to reach a breaking point before that figure.
The IEA said that the high price would eventually "choke off" demand and a balance between supply and demand would return.
What is certain is that for Europe, Mr Miller's role will become increasingly important as head of the continent's single biggest gas supplier.
He also warned against "protectionist tendencies" in Europe, where worries have grown that the company is being used as a blunt negotiating tool of the Kremlin.
"The relationship between Gazprom and Europeans is one of mutual dependence. We rely as much on European consumers as they depend on us," he said.
- INDEPENDENT
