Call for curb on speculators to stop oil hitting $150 a barrel

Oil could reach $150 a barrel and needs a new system of pricing that would take the power out of the hands of financial speculators, Opec delegates at a special summit in Saudi Arabia were told yesterday.

While no one wanted to feed further fear into the market, industry players were speaking behind the scenes about prices going up to $125 or even $150, said Usameh Jamali, a Kuwait-based consultant.

"People in the market believe $100 is sustainable and there is continued upward pressure ... we should be expecting some downward pressure [only] in a couple of years," he said, after taking soundings at the World Energy Congress in Rome this week. Whereas in the past, he said, $20 on the price could be attributed to political uncertainties, now it was at least $30.

"If [President] Bush changes the rhetoric and says the old [consuming countries] and the new [producers] should work jointly together to find a solution, then prices would fall $30".

Another speaker at the "ministerial symposium" in Riyadh, Robert Mabro, director of the Oxford Institute for Energy Studies thinktank, said it was now impossible to predict where the cost of crude could go. "I don't know if $100 is sustainable. Before we leave the room it may go up $20 or it may go down $20 but what does that tell me about the fundamentals [of oil supply and demand]?"

Mabro, a long-time adviser to Opec, said he wanted the oil cartel to spend six months researching ways to find a different pricing structure. He said it was not the high price that was damaging producers and consumers alike but the volatility.

With what he called "crazy" prices causing such uncertainty and the short-term demands of investors in major oil firms, it was very difficult to make a case for the large new investment in expanding oil-refining capacity that was badly needed.

Oil prices fell sharply yesterday after an unexpected rise in crude inventories in the United States, the world's top consumer.

US light crude for December delivery was down $2 at $92.09 a barrel in afternoon trading after rising almost $3 the day before. London Brent crude  was $1.33 lower at $90.03. US government figures showed a rise of 2.8m barrels in crude oil stocks last week, when analysts had forecast a fall of 800,000 barrels.