BAKU, July 3, 2008 (AFP) - Russian energy giant Gazprom forecast on Thursday that the price of oil will 'very soon' rise to 250 dollars per barrel, bringing higher gas prices for European customers.

'We expect that the price of oil will reach 250 dollars per barrel very soon,' the chief executive, Alexei Miller, told journalists on the sidelines of a visit to energy-rich Azerbaijan by President Dmitry Medvedev.

Russia's is the world's second-biggest producer and exporter of oil after Saudi Arabia. Gazprom is a state-controlled gas monopoly that also owns Russian oil major Gazprom Neft and has plans to expand its oil business.

Miller warned that gas prices for Europe will rise to 500 dollars per 1,000 cubic metres by the end of 2008 from their current level of under 400 dollars.

If the price of oil rises to 250 dollars per barrel, then gas export prices will rise further to 1,000 dollars per 1,000 cubic metres, he said.

The European Union relies on Russia for about a quarter of its gas and oil supplies.