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UK to examine oil market trading as prices soar

UK to examine oil market trading as prices soar

By Philip Aldrick

Last Updated: 12:55am BST 04/07/2008



Regulation of Britain’s oil markets will come under political scrutiny later this month amid concerns that the spike in prices is being driven by speculators. 

News that the powerful Treasury Select Committee has called a hearing into the market’s regulation for “mid-July” came as Brent crude rose above $145 a barrel in London – a new high – and Gordon Brown warned oil prices may keep climbing. 

The hearing is a first response to mounting pressure on politicians to take action over oil prices. America has attempted to curb speculation by imposing checks on London’s oil traders through the Commodity Futures Trading Commission, leading to accusations of US imperialism. 

US senators have blamed rising oil prices on “manipulation and excessive speculation” in the London oil market.

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  • Speaking at his approval hearing before the TSC on Wednesday, Lord Turner of Ecchinswell, the incoming chairman of the Financial Services Authority, confirmed that “speculation is an issue that needs to be looked at”. “So far there is no large evidence that speculation is playing a significant role in the oil price. There are a set of fundamental reasons on supply and demand as to why we have the spike in oil prices today.”

    The Prime Minister told the Commons Liaison Committee yesterday: “If demand succeeds supply and is likely to exceed supply for years to come, people will expect the price to rise.”

    The gloomy predictions came as Leeds-based haulage firm Macfarlane Transport collapsed into administration, risking the loss of 300 jobs, according to administrators KPMG.

    UK drivers face further pain, with every $2 rise adding about 1p to petrol prices, according to the AA.

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