"I see the prices next year in the range of $45-$55," Shihab-Eldin told Reuters Television in an interview. "There is room for them to stabilise in this range, certainly above $40," he said, without specifying which price he was referring to.
Global benchmark oil prices are well down from record highs touched two months ago, with US light crude futures trading around $60.60, compared with the high of $70.85. December Brent futures are trading near $58.70 a barrel.
"We saw no reason for prices to go that high. We saw some signs among developing countries that it was beginning to cause them problems and that's not what we want," he said during a visit to Moscow.
Opec 's reference price for a basket of 11 crudes stood at $53.73 a barrel on Friday.
"Based on fundamentals, prices should not increase. They should moderate below the levels of recent months," he said.
Past oil price spikes have damaged industrial economies as rising fuel costs overtake economic growth.
This time developed economies have shown resilience, Shihab-Eldin said. There had been some concern of US oil demand slackening, he said, until data out last week showed the US economy grew strongly in the third quarter of 2005.
He said the market should be reassured about crude supplies, since Opec has spare production capacity of 2 million barrels per day, more than enough to cover extra winter demand, and is planning to bring more on stream next year.
The 11-member Organisation of Petroleum Exporting Countries offered to pump all the oil it could after Hurricanes Katrina and Rita knocked out some US Gulf Coast oil refineries, hitting supplies of products such as diesel and heating oil.
But there were no takers, Shihab-Eldin said, showing that there was already enough crude oil to meet demand.
"The call on Opec won't rise significantly next year. There is no need to increase production for us," he said.
But, he said: "It's really not an issue of crude right now.
"The system has to rebalance itself between the upstream and the downstream and between the quality of crude available and the configurations of the refineries available," he said.
The availability of crude and shortage of refining capacity have boosted profits in the refining sector, which suffered from overcapacity and low margins for years, and many plants are running at full tilt.
Among those seeking to make the most of the high refining margins is the Russian government, host of the Moscow conference where Shihab-Eldin was speaking, which is using tax incentives to encourage upgrades of Soviet-era refineries.
Industry experts say Russia's high tax on crude oil exports makes domestic refining more profitable than selling crude directly onto world markets, so refiners are rushing to upgrade their plants to get more refined products out of each barrel.
Shihab-Eldin said the refining bottleneck was not going to be solved overnight.
"The difficulty will continue in 2006 and maybe 2007 in terms of certain light products where we don't have adequate refining capacity," he said.