Serious concerns after record one-day jump in oil price
Oil prices jumped by more than $10 a barrel
Saturday, 07, Jun 2008 09:53
The US and the four largest economies in Asia are to voice "serious concerns" over "unprecedented" oil prices, after they rose by more than $10 yesterday to $139 a barrel.
In a statement to be issued after the G8 talks, the five countries will say prices pose a great burden, especially on developing countries, AFP has reported.
Earlier, US energy secretary Samuel Bodman said the price surge was a "shock", but not a crisis.
Officials and ministers from the Group of Eight key industrialised nations (G8), as well as China, India and South Korea, are meeting for two days in the northern city of Aomori, to plot a strategy to deal with volatility in oil, gas and coal markets.
The soaring cost of oil is causing growing strain to economies around the world, with some governments facing protests and other pressures from consumers and businesses.
But Mr Bodman dismissed the idea that the world faced a crisis, amid fears the oil price spike could help tip some of the world's economies into recession.
The statement, to be signed by energy ministers from the US, Japan, China and South Korea and a senior Indian official, is expected to say that price rises are "against the interest of both consuming and producing countries".
It will also say that "phased and gradual" withdrawal of price subsidies - blamed by some for fuelling demand in emerging economies - is "desirable", AFP reported.
Both the Indian and Malaysian governments have raised fuel prices in order to cut the subsidies they provide.
Friday's spike in oil prices coincided with a slump in the value of the dollar, plummeting share prices on Wall Street and US unemployment suffering its biggest rise in 20 years.
"It's a shock, but if you look at the rate of oil production globally, it has been 85 million barrels a day for three years in a row," Mr Bodman said ahead of the G8 talks.
"We know demand is increasing because a lot of nations are still subsidising oil, which ought to stop," he said.
He also said he did not see a need for a tightening of regulation of oil markets.
Some say market speculation, and a lack of disclosure of information over the size and nature of reserves, may be stoking the price rises, as well as concerns that demand may be growing faster than supply.
On Friday light crude set a high of $139.12 in after-hours trading on the New York Mercantile Exchange after hitting $138.54 at the regular session.
Crude oil hit a record high of $135 a barrel last month.
Oil prices were given a boost on a report by Morgan Stanley analyst Ole Slorer, who suggested the price of oil could rocket to $150 as early as July.