ABU DHABI // The Chinese premier yesterday called for a new global watchdog under the Group of 20 to bring stability to energy markets.
Wen Jiabao made the proposal in a keynote speech at the World Future Energy Summit as oil prices rose to US$111 a barrel amid increasing tensions over Iran.
"To stabilise the oil and natural gas market, we may consider establishing, under the G20 framework, a global energy market governance mechanism that involves energy suppliers, consumers and transit countries," said Mr Wen.
"We need to formulate … binding international rules through consultation and dialogue, and set up multilateral coordination mechanisms covering forecast and early warning, price coordination, financial regulation and emergency response."
China is expected to become the world's top oil importer within 18 months, surpassing the United States. Oil prices have risen 10-fold in the past 15 years.
The country has also set an ambitious target to derive 11 per cent of its energy from renewable sources by 2015. Mr Wen said China was interested in collaborating with the UAE on renewable energy projects, and spoke of the region's "important strategic position" for China.
Oil markets are influenced by Opec, representing exporters from its headquarters in Vienna, and the International Energy Agency in Paris, representing consumers. Saudi Arabia established the International Energy Forum in Riyadh in 2002 as a bridge between the two sides, but it has gained limited traction.
Mr Wen blamed several factors for what he saw as a mismatch between the price of oil, determined on futures exchanges in London and New York, and the balance of global supply and demand.
"Affected by the international monetary system, excessive speculation, operational monopoly and geopolitical factors, the energy commodity prices have deviated to a great extent from supply-and-demand relations of the real economy," he said. Analysts saw his call for more supervision as a response to current threats to supply. "China's energy security is threatened by sanctions on Iran, and it may see this as a way of promoting its diplomatic strategy of dialogue and reducing threats from unilateral diplomacy," said Jonathan Wood, an analyst at Control Risks.