Iran OPEC Governor says the oil price may reach $500 a barrel in case dollar depreciation continues and the political tensions deepen.

"In case the dollar continues to depreciate, and the political tensions continue to deepen, the oil price may even reach $500 per barrel", Mohammad Ali Khatibi said in response to the question of whether oil price will reach $200 a barrel during the next two-three years, the Shahrvand-e Emrooz magazine reported.

Crude oil price has fallen in seven of the last nine sessions, and is down more than 16 percent from its peak above $147 a barrel earlier this month. On Friday alone the oil price dropped $2 a barrel. The lower prices have resulted from lower demand as the price has kept rising.

But crude prices rebounded on Monday in Asia as the West's standoff with Iran over the country's nuclear activities continues and on the news about the kidnapping of eight foreign oil workers in Nigeria.

Light, sweet crude for September delivery rose 13 cents to $123.39 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore, AP reported.

Iran's President Mahmoud Ahmadinejad reported a significant increase in the number of his country's nuclear centrifuges on Saturday.

"The comments by the Iranian president are a reminder that the Iranian situation remains fluid," said Victor Shum, an energy analyst with consulting firm Purvin & Gertz in Singapore.

The abduction of foreign workers in Nigeria and the threats to blow up pipelines in a month is a reminder of possible oil supply interruption from the largest African oil producer.

"These events really remind the market that the geopolitical risks regarding Nigeria and Iran remain," Shum said. "Overall, the market has weakened due to concerns over the faltering U.S. economy and slackening oil demand in the U.S., but supply side risks will still provide a high floor for pricing."

Current oil prices remain about 65 percent higher than at this time last year.

MMM/GM