Producers and consumers should “wrest control” of trading in the oil by agreeing to restrict prices, Chidambaram told energy ministers in Jeddah, Saudi Arabia, according to speech notes e-mailed from his ministry.

Crude oil touched a record US$139.89 a barrel on June 16 as investors bought commodities to hedge against a weakening dollar and concern mounted that demand is growing faster than supply. Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said Sunday there isn’t a supply shortage.

“Surely demand and supply cannot explain what has happened over the last 12 months,” Chidambaram said. “Oil prices were US$70 a barrel in August 2007 and how is it that they’ve doubled when there has been no dramatic change in demand?”

Oil prices surged as financial institutions invested in the commodity through “unregulated and highly opaque” transactions, he said.

U.S. Energy Secretary Samuel Bodman rejected Saturday calls to put greater control on the markets, and said a shortage of supply was responsible for pushing oil prices higher. He rejected the argument that speculators are leading the markets to record levels.

The market needs between 3 million and 4 million barrels a day of spare oil production capacity, compared with the 2 million barrels a day available, he said. The International Energy Agency estimates that world oil use this year will climb 800,000 barrels a day, or 1 percent, as demand increases in emerging markets.

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