Arab Gulf oil producers "can't alone alleviate" the pressure on international oil markets but should open their oil sectors to foreign investment to help match crude supply and demand, U.S. Secretary of Treasury Henry Paulson said Monday.
In a speech addressing officials and media in the United Arab Emirates' capital Abu Dhabi during his Persian Gulf tour also covering Saudi Arabia and Qatar, Paulson said that record high oil prices, "which are burdens to the world economy," were beyond Gulf countries' control.
"There are no simple or quick remedies for this ... let me be clear in stating that the Gulf region alone cannot alleviate the pressures in global oil markets," Paulson said.
However, pressure on crude prices is mainly the result of a shortage in supply, with speculation and the depreciation of the U.S. dollar only being "small factors" behind the latest price surge, which has seen crude prices almost triple from less than $50 a barrel since the beginning of last year.
On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded at $126.45 a barrel at 0700 GMT, down 90 cents in the Globex electronic session.
The Organization of Petroleum Exorting Countries, which includes Saudi, Qatar and the U.A.E. and pumps about 40% of the world's crude, maintains that oil markets are in balance and high prices largely the result of speculation and the slumping greenback.
"High oil prices are the result of supply and demand factors that are likely to persist for some time. Supplies have been affected by low capacity expansion and declining yields, while demand has surged largely due to growth in emerging markets," he said.
Paulson urged Gulf officials to open up investments in their oil sectors to foreign companies in an effort to help "matching supply to demand" to reduce pressure on oil markets.
"On the supply side, we are urging all oil producing countries to open oil markets to foreign investment, which would support faster and more efficient growth," he said.
Paulson added that on the demand side, market forces should be allowed to work through "avoiding subsidies and other potentially distorting policies," he said.