As oil price hikes continue, India urged oil-producing and consuming countries to evolve a mechanism that would regulate oil prices, by allowing them to fluctuate within a fixed range, according to the Hindu Monday.
Speaking at a meeting of oil-producing and consuming countries in Saudi Arabia's port city of Jeddah last Sunday, Indian Finance Minister P. Chidambaram proposed the adoption of a Price Band Mechanism.
"Consuming countries must guarantee that oil prices will not fall below an agreed level and producing countries must guarantee that oil prices will not rise above a guaranteed level," the Minister said. He added that market forces should be allowed to determine prices "in the band between these levels."
The Minister stressed that the rising demand for oil was not responsible for the surge in prices. Instead, speculators had played a key role in pushing the price to record highs within the last one year. "Demand and supply dynamics cannot explain what has happened over the last 12 months. How is it that the oil price was70 U.S. dollars a barrel in August 2007 and how is it that it has doubled when there has been no dramatic change in demand."
Mr. Chidambaram added that the current pandemonium in oil prices lay in unregulated over-the-counter markets and futures trading in oil.
"In our view, the time has come for producers -- especially OPEC -- and consumers to wrest control over oil trading from the hands of the speculators," he said.
Source: Xinhua
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