MercoPress. South Atlantic News Agency

Chavez forecasts oil peaks of 90 US dollars pb

Venezuelan president Hugo Chavez forecasted that the international oil price will stabilize in the range of 65 US dollars per barrel during the next two years but warned that market volatility could see it soar to 90 US dollars.

"The era of cheap oil is over. I have a report with market prospects from our experts, which indicates that in the short term, next two years, oil should stabilize at 65 US dollars pb", emphasized Mr. Chavez during a brief visit to Kingston to sign a deal for the supply of oil to Jamaica at preferential rates.

However the Venezuelan president added that the report shows that maximum prices of 85 and 90 US dollars pb could be reached in the next two years because of market volatility, "and with prospects of reaching 80 to 100 US dollars by 2012".

The agreement with Jamaica is part of a regional Petrocaribe initiative proposed by Mr. Chavez to which most Caribbean countries have signed up, but Kingston is the first to formalize its participation.

Under the agreement Venezuela will provide oil at a discounted rate of 40 US dollars pb compared to the current 60 US dollars on the world market. The deal initially involves 22,000 bpd which Jamaica will be able to repay in goods and services as well as through low interest loans.

"Much has been achieved by strengthening the relationship with Venezuela", said Jamaica's Primer Minister PJ Patterson. However Mr. Chavez replied "don't thank us it's the call of conscience".

Venezuela currently extracts 3,1 million bpd, is the world's fifth producer and one of the main United States oil suppliers.

The Petrocaribe initiative to supply cheaper oil to the region was signed at a regional summit last June in Venezuela. United States and critics claim president Chavez is using Venezuela's oil to secure diplomatic and political influence in the Caribbean.