IMF says will probe oil market, role of speculators

The International Monetary Fund said Saturday it would investigate the surge in crude oil costs after the G8 club of rich nations called for a probe into wild swings in energy prices.

The fund's chief Dominique Strauss-Kahn said tight demand and supply conditions were the key reason for soaring oil prices, which are up fivefold since 2003, but added that may not be thought to explain all the surge.

"One may think some financial considerations are at stake and that's the reason why the G8 asked the IMF to work for the next meeting... in October to produce a report on this question," he told reporters.

He said some members of the Group of Eight (G8) thought that "probably there would be some influence of financial factors, let's call it speculation if you want," while others disagreed.

"It's totally unclear so we need to have this study to answer this question," he said, after the G8 ended two days of talks about the economic threat from a doubling of food prices in three years and sky-high oil costs.

The ministers in their communique asked the IMF and International Energy Agency to investigate the "real and financial factors behind the recent surge in oil prices and volatility, and the effects on the global economy."

World oil prices soared to record levels of nearly 140 dollars per barrel earlier this month, with some blaming speculators for the swing.

The G8 also urged oil-producing nations to open the taps to curb the feverish rise in crude costs, which has stoked protests worldwide over rising fuel prices.

Strauss-Kahn said the IMF now had a role to play in helping to better understand the workings of the global economy following the boom in commodities, adding the past consensus on the issue had become "outdated."

"A lot of analysis has to be done to rebuild an understanding of the economic environment in which we are," he said.

The IMF would release its next economic forecasts on July 24, he said, predicting a "rather long period of low growth" despite better-than-expected economic expansion in the US, Europe and Japan during the first quarter.

The G8 meeting in the western Japanese city of Osaka began Friday and gathered the top finance officials from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.