Speculators are responsible for volatile oil prices, says India

Special Correspondent

“Rediscover stable market with transparent regulations”

Stability vital for sustained economic development

Need for reasonable oil prices

NEW DELHI: As the slide in international crude oil prices continued amid production cuts by the Organisation of Petroleum Exporting Countries (OPEC), India has blamed speculators for the current situation stating that they are responsible for the escalation as well as the present four-year low of oil prices.

Demanding transparent regulations of futures markets, Petroleum and Natural Gas Minister Murli Deora, while addressing the Energy Ministers’ Meeting in London on Friday, said: “There was an unprecedented boom; then the collapse. Who imagined this? The steep rise in oil prices was distressful for the energy deficient economies, as their evolution, sustenance and the growth centred on oil.”

“In the recent past, with the sudden collapse of the crude prices, you would have realised that the speculators have been having a field day in causing extreme volatility in the prices. It is now evident that oil prices are being governed by the commodity exchanges. This is a dangerous sign,” he told the meeting.

The rally in crude prices forced India in August to hike petrol, diesel and domestic LPG prices by the single largest quantum of Rs. 5 a litre, Rs. 3 per litre and Rs. 50 per cylinder. However, this month, it rolled back a part of the increase.

Mr. Deora said stability was the first requirement for sustained economic development. “Oil prices on a roller coaster have created only uncertainty. What we now need is to rediscover stable market with transparent regulations; the market where producers as well as consumers find equal respect,” he said. He stressed on the need for reasonable oil prices that are neither too low to discourage investment in capacity nor too high to play havoc with import dependent economies.

He warned that shortfall in capacity or capability build up would jeopardise future supplies and volatility in oil prices may rule again. He said India proposed in Jeddah in June the adoption of a “price band mechanism” for oil. Balancing of interests of producers and consumers could only evolve a healthy market.