Oil prices rally as G8 promises transparent market

Oil prices rebounded slightly on Wednesday after falls of more than five dollars a day earlier, as world leaders pledged to make the crude market more transparent.

Brent North Sea oil for August delivery jumped 1.88 dollars to 138.30 dollars a barrel in electronic deals.

New York's main oil contract, light sweet crude for August delivery, won 1.60 dollars to 137.64 dollars.

Oil prices had nosedived Tuesday as falling global equities and resurgent concerns about an economic slowdown stoked fears about future energy demand, traders said.

Group of Eight leaders pledged Wednesday to improve transparency and the supply and demand balance in the oil market by boosting dialogue between producing and consuming nations.

"In response to the sharp rise in oil prices, we agreed to improve balance in supply and demand through efforts and dialogue by both producing and consuming countries to improve transparency," they said in the final statement following their summit in Japan.

Oil prices dip amid G8 warning on sky-high crude

World oil prices fell further on Tuesday as leaders of the Group of Eight rich nations warned on soaring crude costs and appealed for more production to dampen the market.

Brent North Sea oil for August delivery slid 45 cents to 141.42 dollars a barrel in electronic deals.

New York's main oil contract, light sweet crude for August delivery, shed 32 cents to 141.05 dollars.

"It seems to me like oil traders are looking with some interest at the headlines coming out of the G8 meeting," said Dave Ernsberger, Asia director of global energy information provider Platts in Singapore.

The London Brent contract hit an all-time peak of 146.69 dollars and New York crude struck a record high of 145.85 dollars last Thursday.

Soaring oil and food prices pose a "serious challenge" to stable worldwide economic growth, Group of Eight (G8) leaders from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States warned on Tuesday.

At their meeting in Japan, they also called for an increase in oil production and refining capacity to help stem soaring prices.

"The G8 leaders are clearly trying to talk this market down," Ernsberger added.

Oil had slumped on Monday, losing almost four dollars in New York, on the back of easing geopolitical tensions over Iran's nuclear program and a strengthening US dollar.

However, jitters about key crude producer Iran returned to haunt the market on Tuesday.

Iran would "set on fire" Israel and the US navy in the Gulf as its first response to any American attack over its nuclear programme, an aide to supreme leader Ayatollah Ali Khamenei warned on Tuesday.

"The first US shot on Iran would set the United States' vital interests in the world on fire," said Ali Shirazi, a mid-ranking cleric who is Khamenei's representative to the naval forces of the elite Revolutionary Guards.

"Tel Aviv and the US fleet in the Persian Gulf would be the targets that would be set on fire in Iran's crushing response," he said, according to the Fars news agency.

The United States and its top regional ally Israel have never ruled out attacking Iran over its nuclear drive, which the West fears could be aimed at making nuclear weapons.

There has been concern an attack against Iran could be imminent after it emerged Israel had carried out manoeuvres in Greece that were effectively practice runs for a potential strike against Iranian nuclear facilities.

Shirazi said that "the Zionist regime is pressuring the White House leaders to plan a military assault on Iran" and Iran would react "if they commit such a stupidity."

Crude futures had scaled record heights last week owing to simmering tensions over Iran, the weak US dollar and tightening global supplies, traders said.

Rising costs dominate G8 summit

Rising food and fuel prices are topping the agenda for leaders of the world's major industrialised nations as they start a three-day summit in Japan.

Group of Eight (G8) leaders held talks with African leaders on the first day.

UN Secretary General Ban Ki-moon called on the G8 to tackle the "interconnected challenges" of rising food prices, development, and climate change.

Many Western leaders have also used the summit to express concern about the situation in Zimbabwe.

Food focus

The G8 summit opened at a resort on the northern island of Hokkaido.

Leaders from member nations - Britain, Canada, France, Germany, Italy, Japan, Russia and the United States - will be joined by counterparts from some 15 other countries, including eight African states.

apan has spent a record sum of money and deployed about 20,000 police to seal off the remote lakeside town of Toyako for the three-day talks.

As the summit began, the UN secretary general urged donor nations to keep their promises, to help poorer countries achieve the UN Millennium Development Goals.

Mr Ban also told reporters that urgent action was needed to guarantee food safety.

"High food prices are already turning back the clock on development gains," he said.

The impact on the global economy of price rises and other shocks such as the credit crunch have eclipsed other concerns, correspondents say.

The BBC's political editor, Nick Robinson, who travelled to the summit with the UK prime minister, says Gordon Brown will join other leaders in calling for the doubling of food production in Africa.

Our correspondent says the G8 may call for the creation of a panel of international experts to advise on how to predict and avoid another crisis like this.

The EU has already been spelling out plans to alleviate the food crisis.

European Commission President Jose Manuel Barroso told reporters on the sidelines of the summit that the proposed 1bn euro ($1.6bn, £800m) fund to help poor farmers in developing countries would come from unused EU subsidies.

It could help improve farmers' access to seeds and fertilisers, and could provide "safety net measures for the most vulnerable", he said.

The G8 leaders may also face tough questions on aid commitments to Africa. Three years ago they promised to double aid to the continent by 2010 - but campaigners say they are falling far short of that target.

Zimbabwe election

As well as discussing development issues in Africa, the G8 leaders have been discussing Robert Mugabe's controversial re-election in Zimbabwe last month.

US President George W Bush said: "I am extremely disappointed in the elections which I labelled a sham election."

Tanzanian President Jakaya Kikwete, who is also head of the African Union, said the whole continent shared President Bush's concerns but that there was some disagreement over what to do about it.

President Kikwete called for a unity government, said discussions would continue and was optimistic that, "as friends at the end of the day we'll come to an understanding". A number of other bilateral meetings are taking place on the sidelines of the summit.

Mr Bush, attending his last G8 summit, and Russian President Dmitry Medvedev, attending his first, made little progress on the issue of the US plan for missile defence installations in the Czech Republic and Poland.

The two leaders instead cited areas where they had found common ground - preventing Iran from obtaining nuclear weapons and ending North Korea's nuclear weapons programme.

Mr Brown will also have talks with Mr Medvedev.

Meanwhile, the charity Water Aid has told the G8 that the single most effective measure it could take to prevent the deaths of millions of children in poor countries would be to build toilets and provide clean water.

Hundreds of protesters again marched through Sapporo on Sunday, the city closest to the venue, to demand G8 leaders take action on global warming, poverty and rising food prices. The demonstration, which followed a similar protest on Saturday, was heavily policed and ended peacefully.

Violent anti-globalisation marches have marred past G8 meetings.

As the G8 got under way in Japan, leaders of the world's largest Islamic nations assembled for what is being billed as the D8 summit in Malaysia's capital, Kuala Lumpur, with the issue of inflation also high on the agenda there.

Dollar firms ahead of G8 talks, Bernanke speech

The dollar firmed in Asian trade on Monday as the market waited to see if leaders of the world's industrialised nations sent a message to support the sliding greenback at the G8 summit, analysts said.

Market players were also treading cautiously ahead of speeches later this week by US monetary officials, they said.

The dollar was changing hands at 107.04 yen in Tokyo in late morning trade, up from 106.63 in Europe late Friday.

The euro bought 1.5642 dollars, down from 1.57 dollars, while holding steady at 167.41 yen. The US markets were closed on Friday for the Independence Day holiday.

Leaders of the Group of Eight (G8) richest nations are starting talks Monday in the northern Japanese town of Toyako.

US President George W. Bush on Sunday reaffirmed the United States' "strong dollar" policy, saying the US economy's fundamental strength would ultimately support the flagging currency.

"The US believes in a strong dollar policy and believes that the strength of our economy will be reflected in the dollar," he said on the eve of the summit.

Osamu Takashima, chief currency analyst at Bank of Tokyo-Mitsubishi UFJ, said even though Bush was only reflecting the official US position, "it bears importance that he repeated the policy on a summit occasion".

"We believe nothing surprising will come out from the summit.

"We know it would be historical, but it is unlikely that the leaders would say (in a summit statement) they are united to prevent a weak dollar. Nonetheless we have to be careful," Takashima said.

There also is caution in the market as senior monetary officials are to speak later this week, including congressional testimony by Federal Reserve chairman Ben Bernanke on Thursday, he said.

Bush raises North Korea concerns

US President George W Bush has said America remains concerned about North Korea's uranium enrichment activities, which the North has denied.

But, speaking after talks with Japanese PM Yasuo Fukuda ahead of Monday's G8 summit in Japan, he acknowledged North Korea had addressed some concerns.

Mr Fukuda said he would attend the Beijing Olympics opening ceremony, which other leaders have vowed to miss. The G8 summit is being held at a resort on the northern island of Hokkaido.

North Korea handed over a long-delayed list of its nuclear activities to Washington on 26 June.

But Tokyo is worried that plans by the US to remove North Korea from its list of states sponsoring terrorism will undermine attempts to free some of its citizens, allegedly abducted by North Korea in the 1970s and 80s.

Mr Bush promised Mr Fukuda that he would "not abandon" the question of Japanese citizens abducted by North Korea.

Asked by reporters about the ailing US economy, the American leader said he was committed to a strong dollar.

"Our economy is not growing as robustly as we'd like..." he said.

"The United States believes in a strong dollar policy and believes the strength of our economy will be reflected in the dollar."

Speaking at their joint news conference, Mr Fukuda officially announced he would attend the opening of the Olympic Games in Beijing in August.

The Group of Eight (G8) consists of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

Leaders began arriving on Sunday. Mr Bush arrived in time to celebrate his 62nd birthday in Japan.

China, India and South Africa will be among other key nations attending.

Braced for protests

Japan has spent a record sum of money and deployed about 20,000 police to seal off the summit at the remote lakeside resort of Toyako.

Several thousand demonstrators marched through Sapporo, the city closest to the venue, on Saturday, demanding that G8 leaders take action on global warming, poverty and rising food prices.

Four people were arrested in minor scuffles with police.

Violent anti-globalisation marches have marred past G8 meetings.

Last year, Japanese officials said this summit would be about climate change and reaching agreement on a post-Kyoto Accord framework to cut greenhouse gas emissions.

Mr Fukuda had said he would like to get agreement on 50% overall reductions in greenhouse gases by 2050.

But the rising food and oil prices and their effect on the global economy and the world's poorest nations have moved up the agenda.

Mugabe talks

South African President Thabo Mbeki will attend the summit, fresh from crisis discussions in Zimbabwe on Saturday with President Robert Mugabe about last month's disputed election.

He has been the chief regional negotiator on the Zimbabwe crisis, and has been trying to persuade Mr Mugabe to form a government of national unity.

The main opposition party, the Movement for Democratic Change, pulled out of last month's second round presidential election vote, citing campaign violence.

On the way to Japan, a White House official said that the G8 would "strongly condemn what Mugabe has done".

A small group of African states has joined the European Union, the US and other Western nations in criticising the way the election was run.

G8 leaders to set up task force on food crisis: report

Leaders from the Group of Eight industrial powers will agree to establish a task force at their summit next month to tackle the world food crisis, a report said on Monday.

The group will aim to address the immediate problem of food shortages in poorer countries as well as address longer-term challenges such as boosting food production, the Yomiuri Shimbun said, citing unnamed government sources.

The working group is also expected to discuss removal of export restrictions and directing global food stockpiles to those most in need, the daily said.

The report came after UN Secretary-General Ban Ki-moon said he would press G8 leaders at their July summit in Japan to tackle the world food crisis, as well as climate change and the flagging fight against global poverty.

The G8 is made up of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

G8 leaders are expected to issue a statement on the food crisis at the summit in the northern Japanese resort town of Toyako, senior Japanese official Masaharu Kohno has said.

G8 finance ministers warned at their meeting earlier this month that soaring oil and food prices pose "a serious challenge to stable growth worldwide" and may worsen poverty and stoke global inflation.

G8 set to warn oil, food price shock endangers world economy

World finance chiefs are set to warn on Saturday that soaring food and oil prices threaten the global economy, and some blame could fall on the weak dollar.

The officials from the Group of Eight (G8) rich nations held setpiece talks on the last day of their meeting as concerns grow about the economic damage from a doubling of food costs in three years and sky-high oil prices.

The G8 joint statement due later Saturday in the western Japanese city of Osaka may not mention the dollar.

But the ministers likely talked about the currency as its weakness can stoke the dollar price of commodities and inflation.

A G8 source said the group would warn in the communique that high oil and food prices pose serious risks to global economic growth, the fight against poverty and inflation.

"Elevated commodity prices, especially of oil and food, pose serious challenges to a stable growth worldwide, have serious implications for the most vulnerable and may increase global inflationary pressures," according to a draft version of the statement.

"These conditions make our policy choices more complicated," it said, adding the G8 powers would stay vigilant and try to ensure economic stability and growth. The source providing the information asked not to be named.

The G8 was also expected to call on energy-producing nations to boost their oil production capacity to help rein in crude oil prices, which surged in June to nearly 140 dollars per barrel and are up fivefold since 2003.

The cost of fuel has led to protests worldwide, ranging from tens of thousands of truck drivers striking in Spain and Portugal, to street rallies throughout Asia over hikes in subsidised energy prices.

Protests over food prices have included riots in Egypt, Haiti and other nations. Amid the mounting anger, a UN food summit earlier this month pledged "urgent" action and some 6.5 billion dollars in aid to fight the crisis.

The G8 powers discussed the higher prices at a dinner Friday with officials from Australia, Brazil, China, South Africa, South Korea and Thailand, and the heads of the World Bank and International Monetary Fund.

The officials shared the view that the problem had become a huge challenge and serious threat to developing countries, especially for the poor, according to a Japanese finance ministry official who wished to remain anonymous.

The rise in commodity prices also comes as the US also battles a sharp slowdown sparked by a mortgage default crisis that ballooned into a global credit crunch. But the oil and food price shock has become the key worry.

IMF head Dominique Strauss-Kahn said Friday on the sidelines of the meeting that the worst of the credit crisis appeared over, while warning inflation was once again a serious problem.

"We have good reason to think that the financial crisis is mostly behind us but it's too soon to say" for sure, he said, adding that the IMF thought a proper economic recovery was unlikely until 2009.

The G8 meeting began Friday and gathered the top finance officials from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

Washington had been talking tough on the dollar ahead of the G8 meeting to boost the currency, analysts said, bidding to keep a lid on inflation and limit the need for interest rate hikes that could stifle economic growth.

The US currency strengthened on Friday as international markets watched events in Osaka for signs of increased concerns about the dollar, which has fallen about 25 percent since early 2002.

The officials from the Group of Eight (G8) rich nations held setpiece talks on the last day of their meeting as concerns grow about the economic damage from a doubling of food costs in three years and sky-high oil prices.

The G8 joint statement due later Saturday in the western Japanese city of Osaka may not mention the dollar.

But the ministers likely talked about the currency as its weakness can stoke the dollar price of commodities and inflation.

A G8 source said the group would warn in the communique that high oil and food prices pose serious risks to global economic growth, the fight against poverty and inflation.

"Elevated commodity prices, especially of oil and food, pose serious challenges to a stable growth worldwide, have serious implications for the most vulnerable and may increase global inflationary pressures," according to a draft version of the statement.

"These conditions make our policy choices more complicated," it said, adding the G8 powers would stay vigilant and try to ensure economic stability and growth. The source providing the information asked not to be named.

The G8 was also expected to call on energy-producing nations to boost their oil production capacity to help rein in crude oil prices, which surged in June to nearly 140 dollars per barrel and are up fivefold since 2003.

The cost of fuel has led to protests worldwide, ranging from tens of thousands of truck drivers striking in Spain and Portugal, to street rallies throughout Asia over hikes in subsidised energy prices.

Protests over food prices have included riots in Egypt, Haiti and other nations. Amid the mounting anger, a UN food summit earlier this month pledged "urgent" action and some 6.5 billion dollars in aid to fight the crisis.

The G8 powers discussed the higher prices at a dinner Friday with officials from Australia, Brazil, China, South Africa, South Korea and Thailand, and the heads of the World Bank and International Monetary Fund.

The officials shared the view that the problem had become a huge challenge and serious threat to developing countries, especially for the poor, according to a Japanese finance ministry official who wished to remain anonymous.

The rise in commodity prices also comes as the US also battles a sharp slowdown sparked by a mortgage default crisis that ballooned into a global credit crunch. But the oil and food price shock has become the key worry.

IMF head Dominique Strauss-Kahn said Friday on the sidelines of the meeting that the worst of the credit crisis appeared over, while warning inflation was once again a serious problem.

"We have good reason to think that the financial crisis is mostly behind us but it's too soon to say" for sure, he said, adding that the IMF thought a proper economic recovery was unlikely until 2009.

The G8 meeting began Friday and gathered the top finance officials from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

Washington had been talking tough on the dollar ahead of the G8 meeting to boost the currency, analysts said, bidding to keep a lid on inflation and limit the need for interest rate hikes that could stifle economic growth.

The US currency strengthened on Friday as international markets watched events in Osaka for signs of increased concerns about the dollar, which has fallen about 25 percent since early 2002.

G8 finance chiefs to tackle soaring oil, food prices

Finance ministers from the Group of Eight rich nations this weekend will discuss ways to limit the economic damage of soaring oil prices that have eclipsed the credit crisis as their biggest worry.

But experts said the G8 powers have few obvious options to cool the commodities boom in the near future, with any calls for the Opec producer cartel to open up the taps likely to fall on deaf ears.

Soaring crude oil prices are causing growing concern in the major economies and raising the prospect of credit tightening by central banks to contain inflation, even as global economic growth slows, led by the United States.

While the fallout from the US credit crunch continues, the sense of alarm on world markets seen after the turmoil erupted last year appears to have eased, helped by central bank action to shore up the financial system.

Now soaring oil prices appear to have replaced the subprime loan crisis as the main worry for global policymakers, said Tim Condon, head of research at ING Financial Markets in Singapore.

"The subprime worries linger but the authorities, at least in the US, seem to be suggesting they pose less of a risk than they did, whereas the oil price shock is really pressing both on the growth and inflation fronts," he said.

Top finance officials from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States will gather in the western Japanese city of Osaka for a two-day meeting starting on Friday.

Energy officials from G8 nations plus China, India and South Korea on Sunday called on major oil producers to increase investment to keep markets well supplied in response to rising world demand.

But Japanese Finance Minister Fukushiro Nukaga acknowledged last week that the G8 may not be able to come up with measures to reduce oil prices "overnight."

Oil producers insist there is no shortage of oil on global markets, blaming speculators and the weak US dollar. But analysts say they could still do more to take some of the speculative froth out of the market.

"I think OPEC's got justification to suggest that supply is really ample. It's certainly not tight. But I think what they choose to ignore is that they do have a big sway over sentiment," said Mark Pervan, head of commodities research at Australia and New Zealand Banking Group in Melbourne.

If speculators thought Opec would react to high prices by increasing supply, it would "take a fair bit of steam out of the market," he said.

Soaring food prices and joint efforts to tackle climate change are also expected to be high on the agenda at the G8 meeting.

Food prices have doubled in three years, according to the World Bank, hurting developing nations in particular and sparking unrest in some countries and food export restrictions in others.

Although central bank chiefs will be absent from this weekend's G8 meeting, markets will be looking for any signs of increased concern about the weak dollar, particularly in Washington.

Federal Reserve chairman Ben Bernanke has warned that a weaker dollar is adding to US inflation pressures.

But analysts said European officials may be reluctant to agree to saying anything in the joint statement that would drive down the euro as that would stoke inflation in the eurozone, leading to higher interest rates.

"We doubt that the Europeans would be so comfortable to watch the euro come off dramatically because of the extra inflation headache that could induce," said David Mann, currency strategist at Standard Chartered in Hong Kong.

If the G8 can help put a floor under the dollar, however, that could help to keep a lid on oil prices, analysts said.

There is a high inverse correlation at the moment between the dollar and oil prices, which are denominated in the US currency, said ANZ's Pervan.

"Where they can they'll try to talk the dollar up because they know it should have an impact on the oil price in the short term."