India wants regulator to ensure transparency in oil market

India has underlined the need for putting in place an appropriate regulatory mechanism to restrain unhealthy “speculative practices” and bring about transparency in the crude oil market.

“We should collectively put in place appropriate regulatory mechanism to ensure that unhealthy speculative practices are restrained and absolute transparency is brought to the crude oil market,” Petroleum Minister Murli Deora said at the London Energy Ministers’ Meeting here yesterday.

Deora proposed the setting up of an expert group to make suitable recommendations in this regard.

“Stability in prices can be achieved provided the suppliers and buyers of crude oil entwine their interests by entering into long-term sale and purchase agreements not only supplies but also for prices at which such supplies are made. Spot sales should be confined to the minimum.”

Deora said the timing of the meeting could not have been better as this was a time when “all of us are together fighting one of the biggest economic meltdowns.”

“There was an unprecedented boom; then the collapse. Who imagined this?” he asked. There were some indications and apprehensions which “we discussed last time at Jeddah,” he said. However, the dizzy heights of the oil price curve restricted “our responses,” he added.

“The steep rise in oil prices was distressful for energy-deficient economies as their evolution, sustenance and growth centred on oil,” he said. Deora said with the sudden collapse of crude oil prices “you would have realised that the speculators have been having a field day in causing extreme volatility in prices”.

“It is now evident that oil prices are being determined by commodity exchanges. This is a dangerous sign and should have alerted all of us. Unfortunately it did not,” he said.