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Mon, May 24, 2004 - Page 12 News List

Oil market casts shadow over G7 talks

ROLL OUT THE BARRELS Finance ministers yesterday tried to find ways of dealing with a possible global oil shock as consumers were faced with record gasoline prices

AFP , NEW YORK

Group of Seven economic leaders opened formal talks here yesterday to avert the risk of a global oil shock even in the face of OPEC resistance to an immediate declaration boosting output.

Fears that near-record oil prices could brake the gathering world recovery overcast the weekend gathering of finance ministers from the UK, Canada, France, Germany, Italy, Japan and the US.

On Saturday evening, US Treasury Secretary John Snow and his partners met briefly at the Waldorf-Astoria hotel in Manhattan to ponder the outlook. They later dined at New York Mayor Michael Bloomberg's residence.

"Excellent, good start to the meeting," Snow said, without giving more details, as he left the talks.

The G7 discussions resumed in the Waldorf-Astoria yesterday morning and a joint statement was expected later in the day, setting the economic agenda for a gathering of leaders of the Group of Eight -- the G7 plus Russia -- in the southern US state of Georgia from June 8 to 10.

The searing oil market is a headache for drivers paying record prices for gasoline, and a political liability for President George W. Bush ahead of the Nov. 2 presidential elections.

In Europe, where economic growth trails much of the industrialized world, policymakers are pushing for OPEC to cool the market fast.

"I believe that it's necessary in the next few days for OPEC to make an announcement that [oil] production will be raised, and we will continue to press them," British Chancellor of the Exchequer Gordon Brown said on Thursday.

But at an informal meeting in Amsterdam, OPEC oil ministers postponed any concrete decision until their next meeting in Beirut on June 3.

OPEC suggested it was powerless to cool the world oil market alone. High prices were a result of several factors, "principal among them are gasoline bottlenecks ... and increased tensions in some regions of the world," he said.

Bush, who has close ties to the US oil sector, said he was taking action on behalf of American consumers.

"This weekend in Amsterdam, [Energy] Secretary Spence Abraham is meeting with petroleum producers from around the world on actions they can take to help the US and global economy," Bush said in his weekly radio address on Saturday.

"To protect consumers against high [gasoline] prices, the Department of Energy has established a hotline to gather complaints of price gouging," he said.

Brown, French Finance Minister Nicolas Sarkozy and German Finance Minister Hans Eichel on Friday wrote a joint letter to the Financial Times saying the G7 were meeting "to consider the world economy and express concern to the Organization of Petroleum Exporting Countries about the impact of rising oil prices."

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