Abdullah Al-Badri also said he was not concerned about too much oil in the market, even though the Organization of the Petroleum Exporting Countries is pumping about 600,000 barrels per day (bpd) more than its new target of 30 million bpd.
The European Union has raised pressure on Iran, OPEC's second-largest producer, over its nuclear programme by banning Iranian oil from July 1. Tehran has said it may cut off supplies to some unspecified countries.
"This will increase volatility in the market, there is no doubt about it," Al-Badri said on the sidelines of a Chatham House energy conference in London. "For sure, there will be upward pressure for a certain period of time."
"The embargo really is not the best tool to talk to any country," he added, asked whether he considered the EU's move unwelcome.
"Dialogue is the only way that we can solve any problem, rather than the threat here and there."
Brent oil was trading just above $111 a barrel on Monday. Under "normal circumstances" the market would be expected to remain around $100 a barrel — a level endorsed by Saudi Arabia earlier this month.
"$100 is a suitable price for producers and consumers alike," Al-Badri said.
"Under the normal circumstances, this is how the market will behave."
OPEC, at its last meeting in December, adopted a target for its 12 members to supply 30 million barrels per day. This settled a six-month-old argument within OPEC over extra oil Saudi Arabia and other Gulf Arab countries had pumped to meet a shotfall in Libyan supply last year.
Saudi Arabia has yet to cut back on supplies, Libyan production is recovering and, on OPEC's figures, the group is pumping 30.6 million bpd. Al-Badri said this was not leading to oversupply as output would vary month to month.
"I am not concerned about too much oil. When we said 30 million barrels per day, it is the average for the year. Sometimes you produce 30.6, the next time you produce 30.1, then 30."
The market at present is in good condition, Al-Badri said, even as the tension over Iran threatens to ruin hopes for no repeat of the turmoil last year when war in Libya disrupted its output.
"There is no shortage anywhere in the world. I really feel comfortable. Starting 2012 with this OPEC decision, I was very pleased," he said.
"However, now we have a different ball game. It has not affected the market yet, but this risk premium is there."
