Oil conundrum stumps G8

Wed, Jul 9 12:50 AM

Leaders of G8 countries - the world's wealthiest economies - on Tuesday expressed "strong concerns about the sharp rise in oil prices," but stayed short of recommending concrete measures to tide over the crisis. On the second day of their meeting in the northern Japanese island of Hokkaido, the leaders reviewed the state of the world economy and said the recent surge in food and oil prices posed "a serious challenge to stable growth worldwide.

" "The world economy is now facing uncertainty and downside risks persist," said a statement from the Group of Eight countries - the US, Britain, France, Germany, Japan, Canada, Italy and Russia. Global crude prices have more than doubled in the past year to an all-time high of around $145 a barrel, putting pressure on finances of fast growing economies like India and China that depend much on imported oil.

A similar surge in food prices has triggered a crisis in many African countries, pushing millions of people there back into poverty and hunger. On Monday, Prime Minister Manmohan Singh slammed the developed countries and international financial institutions for not doing enough to put a lid on soaring global food and oil prices.

Singh proposed the creation of a forum of oil producers and consumers, an idea that appeared to have found support within the G8. "To enhance energy security, we propose holding an energy forum to focus on energy efficiency and new technologies, which could also contribute to dialogue between producers and consumers," the G8 statement said.

It also called for increasing production and refining capacities in the short term, a suggestion that the OPEC has so far stayed from agreeing. The G8 statement also pushed for "joint efforts to expand upstream and downstream investment in the medium term.

" Still, delegates from several emerging economies, who have also been invited to the summit, said they were disappointed to see no concrete suggestion come out of the meeting and that the statement was silent on the role the speculation in the energy market. The G8 statement said: "We stress the importance of energy markets, which send undistorted price signals and are free from any political pressure.

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